We state the facts in the light most favorable to plaintiff because of the
verdict in his favor. Or Const, Art VII (Amended), § 3; Jensen v. Medley, 336 Or 222,
226, 82 P3d 149 (2003). Decedent began smoking in 1964, when she was 18 and a
student in nursing school. Plaintiff and decedent were married in 1965, the year after they
met. After they were married, decedent did not complete her nursing studies but instead
raised the couple's children. When decedent started smoking, she knew that there was a
potential link between cigarettes and illness, including lung cancer. Her parents had
discouraged her from smoking, in part because of health concerns. Plaintiff quit smoking
several years after he and decedent were married and he encouraged decedent to follow
his example. However, throughout their marriage, she was unable to quit despite a
number of attempts to do so, and she continued to smoke about a pack of cigarettes a day.

Decedent first smoked Benson & Hedges cigarettes, a full-flavor brand
manufactured by defendant. (2) In 1976, defendant introduced Merit cigarettes to the
public with an extensive advertising campaign that emphasized that Merits had less tar
than full-flavor brands but, according to the advertising campaign, tasted like full-flavor
brands. At about the same time, plaintiff and decedent discussed her quitting smoking.
Decedent suggested that, rather than quitting, she would try a low-tar cigarette; plaintiff
agreed, believing that switching brands would be a step toward weaning her off cigarettes
entirely. Soon after their discussion, decedent began smoking the Merit brand instead of
Benson & Hedges. According to her mother's testimony, decedent switched to the Merit
brand because she believed that "the low tar and nicotine filters are better for you," an
idea that others talked about at the time. Indeed, decedent's stepfather had previously
switched to a low-tar brand because he believed that they were safer than full-flavor
cigarettes.

After switching to the Merit brand, decedent continued to smoke the same
number of cigarettes as before. However, according to the testimony at trial, her method
of smoking changed; she took longer puffs, inhaled the smoke more deeply, and held it
longer in her lungs. She began smoking each day early in the morning and continued
until late at night. She could not go without smoking a cigarette for more than an hour
and a half without feeling deprived. Being without cigarettes made her act nervous, edgy,
and irritable; smoking a cigarette would cause her to become calm and serene. On one
long international airplane flight, she was so obviously upset from the lack of a cigarette
that a flight attendant showed her how to smoke in a rest room without setting off the
smoke alarm.

After switching to the Merit brand, decedent made further attempts to stop
smoking entirely, including using nicotine patches, but she was always unsuccessful. She
once told a physician that she had stopped smoking for six months, but plaintiff testified
that she never actually quit. An expert on addictive substances testified unequivocally
that decedent was addicted to nicotine. Decedent was diagnosed with a brain tumor in
February 1998 that proved to be the result of metastatic lung cancer. Despite treatment
and a period of temporary remission, she died on July 13, 1999, at the age of 53. At her
son's wedding shortly before her death, while she was in a wheelchair and on oxygen, she
begged her mother for a cigarette.

After a lengthy trial, the jury returned a verdict for plaintiff on all his
claims. As to the strict products liability and negligence claims, it apportioned fault
between defendant (51 percent) and decedent (49 percent). As to the fraud claim, the jury
found in defendant's favor on two specifications of fraud and in favor of plaintiff on two
other specifications. It awarded compensatory damages consisting of $118,514.22 in
economic damages and $50,000 in noneconomic damages. The jury also awarded
punitive damages of $10 million on the strict liability claim, $25 million on the
negligence claim, and $115 million on the fraud claim, for a total punitive damages award
of $150 million. The trial court entered judgment for the full amount of the compensatory
damages, reasoning that apportionment of fault did not apply to the fraud claim. It also
reduced the total award of punitive damages to $100 million without apportioning it
among the various claims. As stated above, both parties appeal.

On appeal, defendant makes 21 assignments of error. They include
challenges to the denial of motions for directed verdicts for defendant on plaintiff's
claims, challenges to the trial court's decision to give or not to give certain jury
instructions regarding those claims, a challenge to the court's failure to grant a mistrial,
and challenges to the jury instructions pertaining to, and the constitutionality of, the
punitive damages awards. We reject without discussion any assignments of error and any
arguments not addressed below. We begin with the assignments of error that pertain to
the judgment on plaintiff's fraud claim.

I. THE FRAUD CLAIM

In his third amended complaint, plaintiff, after incorporating other
allegations in the complaint, alleged:

"13.

"Defendant * * * recklessly and/or intentionally made fraudulent
misrepresentations about its tobacco products, including misrepresentations
about adverse health effects, the addictive nature of its tobacco products,
and their contents.

"14.

"Defendant * * * engaged in an ongoing public relations effort
beginning in the early 1950s, designed to manipulate public opinion by
creating doubt about the adverse health effects of smoking and to provide
rationalizations to help smokers keep smoking in spite of the adverse health
effects. Defendant * * * made statements which were intended to and did
cause cigarette smokers such as [decedent] to continue smoking cigarettes
in spite of their adverse health effects. Defendant voluntarily assumed a
duty to disclose all research.

"15.

"[Decedent] did not know defendant['s] representations were false
and reasonably relied on, and suffered and died as a result of defendant['s]
misrepresentations.

"16.

"Defendant['s] misrepresentations included the following and similar
misrepresentations:

"a. That the causal link between cigarette smoking and human
disease was in doubt or 'had not been proven' in repeated
statements during the past 50 years;

"b. That cigarettes are not addictive; and

"c. That 'low tar' cigarettes delivered less tar and nicotine to the
smoker and were therefore safer and healthier than regular
cigarettes as an alternative to quitting smoking."

Answering specific interrogatories, the jury found in plaintiff's favor on two
theories of fraud. First, it found that defendant voluntarily assumed a duty to disclose all
research regarding smoking and health to consumers, that it breached that duty by
concealing research from consumers, that decedent, one of defendant's consumers,
reasonably relied on defendant's performance of its assumed duty, and that those
representations and reliance were a cause of her death. Second, the jury found that
defendant falsely represented that "low-tar" cigarettes delivered less tar and nicotine to
the smoker and that they were therefore safer and healthier than regular cigarettes and
presented an alternative to quitting smoking, that decedent relied on those
representations, and that those representations and her reliance on them were a cause of
her death. Specifically, the jury answered "yes" to the following questions:

"9. Did Philip Morris voluntarily assume a duty to disclose all
research regarding smoking and health to [decedent]?

"* * * * *

"10. Did Philip Morris fail to perform its assumed duty by
concealing research, did [decedent] reasonably rely upon defendant's
performance of its duty, and was such failure to perform and reliance a
cause of [decedent's] death[?]

"* * * * *

"13. Did Philip Morris make false representations that 'low tar'
cigarettes delivered less tar and nicotine to the smoker and were therefore
safer and healthier than regular cigarettes and an alternative to quitting
smoking upon which [decedent] reasonably relied, and if so, were such
false representations and reliance a cause of [decedent's] death?"

Defendant first assigns error to the trial court's denial of its motion for a
directed verdict on plaintiff's fraud claim, ORCP 60, offering several arguments in
support of its position. We begin by addressing the issue of preemption by federal law.
On appeal, defendant first argues that the "low-tar" fraud specification is preempted.
Later in its brief, in a footnote, it asserts that "[p]laintiff's fraud claim for breach of an
assumed duty also is expressly preempted[.]" But defendant did not raise the issue of
whether the assumed duty fraud specification is preempted in its motion for a directed
verdict to the trial court. We therefore decline to address that argument as it applies to
plaintiff's fraud claim for breach of an assumed duty. See ORAP 5.45(1) (embodying
preservation-of-error rule); State v. Thompson, 328 Or 248, 254 n 3, 971 P2d 879, cert
den, 527 US 1042 (1999) (refusing to address claim absent a "thorough and focused"
analysis). We return to the issue that defendant did preserve.

As noted, the jury found that defendant fraudulently represented that low-tar cigarettes were safer than full-flavor cigarettes. As it did in its motion for a directed
verdict to the trial court, defendant argues under its first assignment of error that
plaintiff's "low-tar" fraud claim is preempted by federal law. It explains, "[P]laintiff's
claim necessarily boils down to this: defendant was at fault for failing to disclose
information about the health risks of low-tar cigarettes." (Emphasis in original.) The
statutory provision relied on by defendant, 15 USC section 1334(b), is part of the Federal
Cigarette Labeling and Advertising Act. That section provides:

"No requirement or prohibition based on smoking and health shall be
imposed under state law with respect to advertising or promotion of any
cigarettes the packages of which are labeled in conformity with the
provisions of this chapter."

The possibility of a connection between smoking and disease first received
significant public attention in 1952 through an article in Reader's Digest, "Cancer by the
Carton," that discussed then-recent research with mice and suggested that smoking
caused lung cancer. The next year, overall cigarette sales fell significantly for the first
time. As a result, the leading manufacturers in the tobacco industry, including defendant,
met and agreed on a common response to the health issue. Their primary public action
was to create the Tobacco Industry Research Council (TIRC). In 1954, the TIRC's
creators, including defendant, first published as an advertisement in over 400 newspapers,
including newspapers in Oregon, a statement entitled "A Frank Statement to Cigarette
Smokers" (the Frank Statement). In the Frank Statement, the industry stated that it
recognized public concern about recent reports "that cigarette smoking is in some way
linked with lung cancer in human beings." Although the Frank Statement emphasized
that the research was not conclusive, it also agreed that the research should not "be
disregarded or lightly dismissed." Instead, the industry stated that it would "meet the
public's concern aroused by the recent reports" by pledging "aid and assistance to the
research effort into all phases of tobacco and health." To accomplish that purpose,
defendant and other manufacturers of tobacco products created the TIRC and placed it in
charge of the industry's research activities. The industry represented that "a scientist of
unimpeachable integrity and national repute," along with an advisory board of "scientists
disinterested in the cigarette industry" would conduct the research effort. The signers of
the Frank Statement, including defendant, explained that "we believe the people are
entitled to know where we stand on this matter and what we intend to do about it." Soon
afterwards, one of defendant's vice-presidents stated in a publicized speech that the
industry would "stop business tomorrow" if it thought that its product was harming
smokers.

"Most scientists recognized long ago that there are no simple, easy
answers in cancer research. They know that the answers to fundamental
questions about causation can come only through persistent scientific
research.

"The tobacco industry supports and cooperates with all responsible
efforts to find the facts and bring them to the public.

"In that spirit, we are cooperating with the U.S. Surgeon General and
his special study group appointed to evaluate presently available research
knowledge. Similar cooperation has been offered to the American Medical
Association's proposed study.

"We know we have a special responsibility to help scientists
determine the facts about tobacco use and health.

"The industry accepted this responsibility in 1954 by establishing the
Tobacco Industry Research Committee to provide research grants to
scientists in recognized research institutions. This research program is
continuing on an expanded and intensified scale."

(Emphasis added.)

In 1966, the Tobacco Institute issued a press release in response to a forthcoming
article on tar and nicotine in cigarettes in which it said, in part:

"Scientists throughout the world are continuing to investigate to
learn the full facts about 'tar' and nicotine, and about questions concerning
tobacco and health. The tobacco industry is supporting much of this
research and will continue to do so."

Based on the evidence before it, the jury in this case was entitled to infer
that defendant and the industry as a whole did not conduct the research that they
represented that they would conduct. (6) Rather, the evidence produced by plaintiff
shows that they focused their efforts and their health-related research on attacking
research that showed the dangers of smoking in order to keep alive a public controversy
over whether tobacco smoke was harmful to the human body. The jury was entitled to
infer that defendant's purpose was to give smokers what one of defendant's executives
described as a "crutch"--essentially a rationalization--that would justify their continued
smoking. The jury was also entitled to find, based on the evidence produced by plaintiff
at trial, that defendant knew throughout this time period that tobacco smoke was a
carcinogen and that nicotine was addictive--indeed, that nicotine addiction was the
primary reason why smokers continued to smoke. Rather than making its research public
as it had represented that it would do, defendant publicly denied and suppressed the
results of its research.

Moreover, plaintiff offered evidence that defendant avoided studying the
health effects of smoking at the very time that it was insisting on the need for additional
research on that subject. For example, defendant's scientists were not allowed to conduct
studies on actual production cigarettes or to conduct tests of the effects of those products
on animals. Any research conducted by defendant that could involve the "biological
activity" of tobacco smoke (a euphemism for its carcinogenic properties) was conducted
at a laboratory in Europe. The results of that research were forwarded to only one
supervising scientist in the United States at his home address; thus, the research never
became part of defendant's official records, nor was it publicized as defendant had
represented would occur. In fact, that particular scientist told a subordinate that his role
was to keep the controversy over the health effects of smoking alive.

Rather than focusing its research on issues of health, as it had represented
that it would do, defendant focused on research that led to the modification of the tobacco
in the cigarettes it produced. One of those research efforts included adding substances
that would increase the impact of the nicotine in the cigarettes on the smoker, thereby
increasing their addictive effect. Although defendant manipulated the tobacco itself and
added a number of flavorants, the most significant additives were ammonia and urea.
Those substances, according to plaintiff's evidence, have the effect of increasing the
proportion of "free base" nicotine in the smoke from the cigarette; that reduces the
amount of nicotine that is bound to particulates and is more difficult for the body to
absorb. The result is an increase in the effect of the nicotine on the human body, leading
to greater addiction.

According to plaintiff's experts, smokers continue smoking because of
nicotine's addictive qualities. The jury could find based on the evidence from defendant's
internal files that defendant was well aware of that fact. Defendant's research indicated
that smokers develop a certain "comfort level" of nicotine and will smoke until that level
is reached. Nicotine, according to the evidence, does not itself cause cancer; rather, it is
the "tar"--the solid matter in the cigarette smoke--that produces that result. The amount
of tar that a cigarette delivers, however, tends to be proportionate to the amount of
nicotine in the smoke. During the 1940s and 1950s, the Federal Trade Commission
(FTC), working with the tobacco industry, developed what remains the standard method
for measuring the amount of tar and nicotine in a cigarette. The FTC created a machine
that smokes a cigarette in a standard fashion to a standard length. It is possible through
the use of the machine to measure the tar and nicotine that a particular cigarette produces
and to use those measurements to develop a relative ranking of the amounts of tar and
nicotine in each brand of cigarettes. Although the FTC does not classify specific brands
as high or low in tar content, the FTC measurements that the machine produces have
appeared on cigarette packages for decades, including the packages for the Merit brand.

One inherent problem with the FTC measurements is that they do not
account for the manner in which smokers actually ingest the smoke from a cigarette. For
example, a person who takes longer or more frequent puffs than the machine takes will
receive a higher dose from each cigarette than the machine indicates. According to
plaintiff's evidence, that problem in the FTC measurement process is significant with
regard to low-tar cigarettes such as Merit because smokers compensate for the lower
nicotine level that such cigarettes contain. The jury could have found that defendant's
understanding that smokers tend to compensate for lower nicotine levels played a major
role in the development of its Merit brand.

The jury could have found from the evidence that defendant knew that
smokers who smoke cigarettes that are low in tar and nicotine compensate for those
reductions by smoking more cigarettes, by taking longer, deeper, and more frequent
inhalations of smoke, by holding the smoke in their lungs longer, and by subconsciously
holding the cigarettes in a way that blocks microscopic ventilation holes. Those
behaviors are prompted by the need of smokers to reach the level of nicotine in their
bodies where they feel physically comfortable. Until that level is reached, smokers will
continue to smoke in order to receive the amount of nicotine that their bodies require.
Thus, smokers who switch to low-nicotine and low-tar cigarettes such as Merit may
compensate for the low content, often unconsciously. Because the ratio of nicotine to tar
in a cigarette remains relatively constant, a person who smokes to obtain the effect of
increased nicotine--the addictive portion of the smoke--will ingest more tar. Thus, the
effect of compensation is that a person who smokes a low-tar cigarette may not actually
reduce his or her exposure to the harmful substances in tobacco smoke.

Defendant was aware of the concept of compensation by 1961, at least in
broad outline. Its subsequent research confirmed the significance of compensation as it
continued to create strategies to meet the onslaught of other research that suggested that
cigarette smoking was hazardous to human health. In 1971, defendant conducted a study
of smokers in which it asked participants to smoke cigarettes that delivered varying
amounts of tar and nicotine. That study showed defendant that, as tar delivery decreased,
cigarette consumption increased, with the result that the smoker's daily intake of tar
remained constant. A similar effect occurred with nicotine. The study concluded that its
"findings support the hypothesis that the smoker does have daily intake quotas for tar
and/or nicotine; and that he titrates his smoke intake to meet his quotas." In addition, a
1975 memorandum from one of defendant's leading researchers described research that
showed that smokers smoked Marlboro Lights--a Philip Morris low-tar brand--differently
from how they smoked the full-flavor Marlboros. Among other things, the study showed
that each inhalation was greater in volume, with the result that Marlboro Light smokers
received higher proportions of the available tar. Although many of defendant's senior
scientists knew about the results of research regarding compensation, defendant neither
published that information nor shared it with regulatory agencies or the public health
community.

Defendant specifically developed the Merit brand of cigarettes to respond
to the health concerns that became especially prominent after the 1964 Surgeon General's
report on smoking and health. Defendant's goal in developing Merits was to produce a
cigarette that consumers would perceive as healthy. The intended marketing target was
smokers who believed that smoking was not healthy, but who sought some reason to
continue smoking. Advertisements for the Merit brand described it as a "light" or "low-tar" cigarette. Although defendant did not expressly assert in its advertising campaigns
that Merit cigarettes were healthy or safe for consumption, the jury could find from the
evidence presented by plaintiff that it otherwise promoted that message.

At the time that defendant began promoting the Merit brand, the public
health community generally believed that low-tar cigarettes were safer than full-flavor
brands. Indeed, the 1981 Surgeon General's report suggested that smokers who could not
quit smoking could diminish the risk to their health by switching to a low-tar brand. At
the time of that report, the extent and importance of the concept of compensation was not
generally known to the relevant scientific community, in part because defendant kept its
research confidential and unpublished. For instance, the person who drafted the 1981
Surgeon General's report testified at trial that, if he had known at the time what defendant
knew, he would not have recommended in that report that smokers switch to a low-tar
cigarette as an alternative to quitting.

As stated above, defendant argues that plaintiff's low-tar fraud claim is
preempted by the Federal Cigarette Labeling and Advertising Act. It argues that
plaintiff's claim is, at bottom, "a claim that defendant should have said more about low-tar cigarettes." (Emphasis in original.) According to defendant, "the Labeling Act bars
any claim that defendant[] should have provided additional information about the health
risks of low-tar cigarettes." Plaintiff responds that "[f]ederal preemption does not relieve
defendant of its duty not to deceive." For the reasons discussed below, we agree with
plaintiff.

Cipollone makes it clear that section 1334(b) does not preempt all common-law claims. Rather, the Court explained, it is necessary to "look to each of [the]
common-law claims to determine whether it is in fact pre-empted." 505 US at 523
(footnote omitted). The plaintiff in Cipollone alleged two theories of fraudulent
misrepresentation. Id. at 527. His first theory of fraud was that the defendant used its
advertising to neutralize the federally mandated warnings under the statute. That claim
was predicated on a state-law prohibition against advertising statements and promotional
information that minimized the health hazards associated with smoking. The Court held
that that claim was preempted because the statute preempts both warning requirements
and prohibitions. Id.

In contrast to the above theory alleged by the plaintiff in his first theory in
Cipollone, his second theory was that the defendant had committed fraud by "false
misrepresentations of a material fact [and by] conceal[ment] of a material fact." The
Court reasoned that that theory was not preempted by the statute because it was
predicated not on a duty based on smoking and health, "but rather on a more general
obligation--the duty not to deceive." 505 US at 528-29. The Court relied on the fact that
the legislation enacted by Congress expressly reserved the FTC's authority to identify and
punish deceptive advertising practices. According to the Court, "[t]his indicates that
Congress intended the phrase 'relating to smoking and health' [in the statute] * * * to be
construed narrowly so as not to proscribe the regulation of deceptive advertising." Id. at
529 (footnote omitted). The Cipollone Court "conclude[d] that the phrase 'based on
smoking and health' fairly but narrowly construed does not encompass the more general
duty not to make fraudulent statements." Id.

We conclude that plaintiff's "low-tar" fraud specification does not
constitute an allegation that is preempted by section 1334(b). Plaintiff alleged that
defendant deceived the smoking public by falsely representing that low-tar cigarettes are
safer than regular cigarettes and thus constitute a reasonable alternative to quitting
smoking altogether. Based on the evidence offered by plaintiff under its fraud
specification, the jury could properly have found that, apart from any labeling of its
product, defendant affirmatively represented to the smoking public and the public health
community that it would reveal the results of its research as part of a common quest to
determine the health hazards of smoking. Instead, it hid the results of its research and
offered the Merit brand to the public, knowing that the public health community generally
believed that low-tar cigarettes were safer than full-flavor brands. In other words,
defendant permitted the public health community to promote brands like Merit on its
behalf, knowing that, in fact, they were not safer than full-flavor brands. Plaintiff's fraud
specification, when understood in this light, does not allege that defendant attempted to
neutralize the federally required warnings or that it failed to give additional warnings
concerning particular kinds of cigarettes, claims that would have been preempted under
the federal act. Rather, it alleges the violation of the general duty not to deceive and, as
the Court in Cipollone held, such a claim is not preempted.

We turn to defendant's other arguments relating to plaintiff's fraud claim.
In its second assignment of error, defendant challenges the court's jury instruction that, if
the jury found that defendant voluntarily assumed a duty to decedent as a member of the
consuming public, it must disclose all material matters of which it had knowledge. In its
third assignment of error, defendant claims that the court erred in failing to instruct the
jury that the Frank Statement was not a representation on which decedent relied and that,
therefore, the statement could not be the basis for plaintiff's fraud claim. Defendant
supports those assignments in part with arguments that go beyond what it raised to the
trial court; we therefore do not consider those portions of its arguments because the trial
court did not have the opportunity to consider them. See ORAP 5.45. Nonetheless, some
of the unpreserved arguments provide background to our discussion of the arguments that
defendant did preserve and that it now raises on appeal. Accordingly, we refer to them
below only to provide context.

Defendant first argues--with regard to plaintiff's claim that it failed to
disclose its research to the public--that there is no legally cognizable claim in Oregon for
a fraud perpetrated on the public based on an assumed duty. It points out that all the
Oregon cases that discuss liability for an assumed duty involve claims in which the
plaintiff attempted to hold the defendant liable in negligence for responsibilities that the
defendant assumed on behalf of a particular person or class of persons. See, e.g.,
Quackenbush v. PGE, 134 Or App 111, 118, 894 P2d 535, rev den, 322 Or 193 (1995)
(assumed duty to make tree safe for decedent to prune it); Peterson v. Mult. Co. Sch. Dist.
No. 1, 64 Or App 81, 93-94, 668 P2d 385, rev den, 295 Or 773 (1983) (assumed duty to
make safety recommendations to high school football coaches). Defendant's assertion is
correct as a matter of a survey of existing case law, but its assertion does not resolve the
issue whether liability arises from a fraudulent representation by a defendant that has
assumed a duty to the consumer public.

In Williams v. Philip Morris Inc., 182 Or App 44, 48 P3d 824 (Williams I),
adh'd to on recons, 183 Or App 192, 51 P3d 670 (2002) (WilliamsII), rev den, 335 Or
142, vac'd and rem'd, 540 US 801, 124 S Ct 56, 157 L Ed 2d 12 (2003), on remand, 193
Or App 527, 92 P3d 126 (2004) (Williams III), aff'd, 340 Or 35, 127 P3d 1165 (2006), we
considered a similar issue. (8) In that case, the defendant argued that Oregon did not
recognize a common-law claim of fraud arising out of representations made to the
consumer public rather than to a specific individual. We disagreed, observing that the
"plaintiff's theory fits comfortably within traditional common-law principles." Williams
I, 182 Or App at 53. We apply a similar analysis here.

The elements of common-law fraud are:

"(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's
knowledge of its falsity or ignorance of its truth; (5) his intent that it should
be acted on by the person and in the manner reasonably contemplated; (6)
the hearer's ignorance of its falsity; (7) his reliance on its truth; (8) his right
to rely thereon; (9) and his consequent and proximate injury."

Conzelmann v. N.W.P.&D. Prod. Co.,190 Or 332, 350, 225 P2d 757 (1950); see also
Meader v. Francis Ford Inc., 286 Or 451, 456, 595 P2d 480 (1979) (holding that a claim
in fraud need not be founded on a contractual obligation but will lie based on the
knowledge of a falsity of a representation and the intention to mislead). As we said in
Williams I, "the fundamental character of fraud is the communication of a misimpression
to induce another to rely on it." 182 Or App at 54. One species of a misimpression that
will give rise to an actionable claim in fraud is a promise made with the knowledge that it
will not be performed or with reckless disregard about whether it will be performed.
Elizaga v. Kaiser Found. Hospitals, 259 Or 542, 548, 487 P2d 870 (1971). It follows
that, if defendant made a promise to the consumer public without intending to perform it,
a traditional element of common-law promissory fraud would be satisfied.

Defendant argues, however, that there is no evidence that decedent relied
on any promise made by defendant to reveal the results of its research. It points out that
there is no evidence that decedent ever saw either the Frank Statement or the 1962
statement. Indeed, decedent was eight years old when defendant published the Frank
Statement, and plaintiff testified that he had no reason to believe that she had heard, seen,
or cared about industry advertising in 1954. Plaintiff agrees with defendant's assertion
about the state of the evidence, but responds that it is not necessary to show that decedent
was aware of defendant's assumed duty; he points out that the plaintiff in Peterson did not
know that the defendant had undertaken the duty that it negligently failed to perform in
that case.

In Peterson, the plaintiff became a quadriplegic after suffering a neck
injury at a high school football practice. 64 Or App at 83. He asserted that, because the
Oregon School Activities Association (OSAA) had voluntarily undertaken to make and
disseminate safety recommendations to the high school that he attended and had failed to
perform that duty, it was liable for negligence. Id. Plaintiff's argument in this case,
however, fails to distinguish between the different requirements for proving a claim of
negligence and for proving a claim of fraud. The fraud theories are intended to protect
different interests from the negligence theories. The plaintiff's lack of knowledge about
an assumption of a duty by the OSAA in Peterson did not matter to his claim for
negligence because the assumed duty of care by the OSAA extended to the plaintiff's
interest in participating safely in a particular activity.

We conclude that Peterson is inapposite. Unlike in a negligence claim
where a defendant may assume a duty to more than one person or to a class of persons,
the intrinsic nature of a claim of promissory fraud is such that it protects the interests only
of those to whom a promise is made specifically and directly. That is because the
requisite intent to mislead in a fraud claim consists of a defendant misrepresenting a
material fact for the purpose of misleading the other party. U.S. National Bank v. Fought,
291 Or 201, 225, 630 P2d 337 (1981). That kind of requirement does not exist in a
negligence claim where a duty of reasonable care is assumed generally on behalf of a
class of persons participating in a particular activity. We conclude therefore that, in the
absence of evidence that decedent relied on defendant's representations that it would
reveal its research to the public, the trial court erred when it submitted that theory to the
jury. Yet, as explained below, because we find no error regarding the "low-tar"
specification of fraud, that error does not require reversal. See Moe v. Eugene Zurbrugg
Construction Co., 202 Or App 577, 588, 123 P3d 338 (2005) (if jury returns special
verdict and court upholds at least one specification, any error regarding other
specifications does not require reversal).

We return to the issue whether the trial court properly submitted the "low-tar" specification of fraud to the jury, having already determined that it was not
preempted by federal law. Defendant argues that it never represented publicly that low-tar cigarettes were safer; rather, throughout the time that decedent smoked Merits, it was
the public health community, not defendant, that gave smokers the information that low-tar cigarettes were safer and that suggested that they switch from full-flavor brands. It
follows, according to defendant, that it cannot be held liable for fraud when smokers
relied on recommendations from the public health community rather than on what it
represented in its promotion of low-tar cigarettes. Plaintiff counters that there is evidence
that defendant's development and promotion of low-tar cigarettes, in particular, the Merit
brand, was part of its continuing fraudulent effort to dissuade the public health
community about the hazards of smoking, an effort that began in 1954 and continued
thereafter.

The flaw in defendant's argument is its failure to recognize the extent to
which the public health community relied on what the jury could have found to be
defendant's deceitful failure to fulfill the promises that it made to the public at large,
including the public health community, in the Frank Statements and elsewhere. The jury
could have inferred from the evidence that defendant knew from its undisclosed research
that the FTC machine results on which the public health community relied were
misleading but that defendant and other members of the industry worked to retain that
standard of testing because it "gave low numbers." Defendant was also aware of the
significance of the concept of compensation and that people who smoke low-tar
cigarettes typically do not reduce their intake of tar and nicotine. Although defendant
publicly represented that it was working with scientists to discover the truth about
tobacco addiction and health, it did not share the essential information that it had learned
from its research, either with the public or with non-Philip Morris scientists, as it had
promised. In particular, the evidence shows that decedent switched to the Merit brand of
cigarettes in 1976 because she believed that "the low tar and nicotine filters are better for
you." The jury could infer from the evidence that decedent's belief arose because of the
mistaken belief of the public health community that low-tar cigarettes were safer than
full-flavor brands. The jury could also find that smokers like decedent were ultimately
the intended recipients of defendant's deceit perpetrated on the public health community.

Defendant cannot shield itself from liability merely because it used a third
party to deliver its misleading message. In American National Bank of Denver v. Tonkin,
286 Or 73, 77, 592 P2d 1008 (1979), the plaintiff agreed to lend $300,000 to Baron if the
defendant would guarantee the loan. The plaintiff told Baron that the loan would be for
two and one-half years at nine percent interest. Baron communicated that statement to
the defendant, who agreed to guarantee the loan on those terms. In fact, without telling
the defendant, the plaintiff made the loan for 365 days with renewal up to two and one-half years and at interest rates higher than nine percent. When the plaintiff sued to collect
on the guaranty, the defendant raised the affirmative defense of fraud. The Supreme
Court held that there was sufficient evidence that the bank made the statements to Baron
with the intent that he would convey them to the defendant to support the affirmative
defense. Relying on earlier cases, it held that one who makes representations to another,
intending for the recipient to communicate them to a third person so that the third person
may act on them, may be liable to the third person for fraud. Id. at 81-83, 85-86.

In Williams I, we held, relying on Oregon Supreme Court decisions, that "a
person who makes a misrepresentation may be liable to the intended recipients of a
misrepresentation without regard to whether the person making the representation intends
to defraud a particular person." 182 Or App at 53. What matters is whether the
representation was intended ultimately for the public or for a particular class of persons to
which the plaintiff belongs. Id. at 53-55. We adhere to those principles in this case.
Here, there is evidence from which the jury could find that defendant concealed the
results of its research from the public health community with the intent that low-tar
cigarettes would receive a favorable recommendation from that community and that
members of the consumer public would rely on those recommendations. That evidence is
sufficient to support plaintiff's claim that defendant misrepresented to smokers like
decedent that low-tar cigarettes were safer.

Our conclusion that the trial court did not err in denying defendant's motion
for a directed verdict on plaintiff's claim that defendant committed fraud by
misrepresenting to the consumer public that low-tar cigarettes were safer requires us to
consider defendant's thirteenth assignment of error, which affects all of plaintiff's claims--the trial court's failure to grant a mistrial during the jury's deliberations. During the trial,
the court admitted hundreds of documentary exhibits offered by both parties. Each party
occasionally highlighted portions of the exhibits to show the jury during a witness's
testimony or as part of opening statements or closing arguments. Before the jury began
deliberating, defendant's counsel gave the clerk copies of defendant's exhibits that did not
include any highlighting so that the clerk could give them to the jury; they believed that
plaintiff's counsel had done the same with plaintiff's exhibits. On the second day of
deliberations, however, defendant discovered that approximately 100 of the exhibits that
plaintiff's counsel gave the clerk for delivery to the jury contained highlights that
plaintiff's attorneys had made on them. One exhibit also contained an attached note in
which plaintiff's attorney included selective quotations from a different exhibit. When
defendant objected to the actions of plaintiff's counsel, they explained that they were "just
trying to direct [the jury's] attention to the appropriate portions of the documents."
Defendant moved for a mistrial, arguing that plaintiff's counsel's actions were misconduct
that prejudiced its ability to receive a fair trial.

Rather than granting defendant's motion for a mistrial, the trial court
ultimately decided to give a curative instruction that addressed both the highlighting and
the fact that the jury had accidentally received several exhibits that had not been admitted
into evidence. After telling the jury to disregard those exhibits, the trial court told the
jury:

"And also the Court--it has been brought to the Court's attention that
in some of the exhibits from the plaintiff they're highlighted with yellow
markings. You are not to give any special weight to any highlighting in a
document.

"You have the right to review that document and it's your
responsibility to determine what weight you will give to various portions of
that document. And I will give you an example. I could read a novel, and I
could go through that novel and I could highlight portions that I thought
were very important to me.

"I could give that same novel to you to read, and you read it, 'Why
was this guy highlighting this right here? It doesn't mean anything to me.'
You might highlight other areas of the novel. You give it to a third person,
a third person might highlight other areas.

"We may have to go through a large number of people before we
start finding people that agree with what we, as individuals, highlighted.
Just because counsel for the plaintiff highlighted an area, that [does not]
mean that you are bound to accept that as being an important area for this
trial.

"You might read another paragraph or another page, and that might
be more important to you. As a juror that's your responsibility to do that."

Defendant argues that the court's instruction was insufficient to cure the
effect of the highlighting, arguing that there is a presumption of prejudice when a jury
receives unauthorized communications. The cases on which defendant relies all involve
the jury receiving information that was not admitted in evidence; none involves
emphasizing certain aspects of the admitted evidence. In addition, they all involve
review of the jury's verdict, not actions that the trial court took before the verdict to cure
any prejudice. See, e.g., State v. Mapel, 54 Or App 795, 797, 636 P2d 445 (1981) (jurors
in drug case attended seminar during trial at which prosecutor and state witness spoke);
State v. Holmes, 17 Or App 464, 476, 522 P2d 900 (1974) (court provided dictionary for
jury to use during deliberations); Stephens v. South Atlantic Canners, Inc., 848 F2d 484,
486-89 (4th Cir), cert den, 488 US 996 (1988) (prejudicial comments written on exhibits).
Assuming, however, that a presumption of prejudice arose under the circumstances of
this case, it does not necessarily follow that the trial court's only choice was to grant a
mistrial. The question is whether the instruction that the court gave was sufficient to
overcome any prejudice that plaintiff's actions may have created.

We review a trial court's denial of a motion for mistrial for an abuse of
discretion because the trial judge is in the best position to evaluate the prejudicial effect,
if any, of the challenged actions and whether there are alternatives to a mistrial. State v.
Lotches, 331 Or 455, 496-97, 17 P3d 1045 (2000), cert den, 534 US 833 (2001). In this
case, plaintiff's counsel's action in highlighting exhibits that counsel intended the clerk to
submit to the jury may have been improper. The effect of that action was to direct the
jury's attention to the portions of the documents that plaintiff thought persuasively
supported his contentions. Advocacy, however, ends when the jury retires to consider its
verdict. At that point it is the jury's role, not that of the parties, to determine which
portions of the evidence are important and which are not. The jury should have been
given unaltered exhibits.

The question, however, is whether it was within the trial court's discretion
to respond to those circumstances in some way other than ordering a mistrial. In
exercising its discretion, the court could have considered that the highlighting was a small
aspect of a long and hard-fought trial during which both parties had emphasized to the
jury the portions of the evidence that they considered important. The trial court also
stated more than once during the course of the trial that the jury was particularly attentive
and involved in the case. The curative instruction that the court gave was
straightforward, and it illustrated the court's point with an appropriate example. We
perceive no prejudice from the highlighting that could not be cured by the instruction.
See State v. Terry, 333 Or 163, 177, 37 P3d 157 (2001) ("'Jurors are assumed to have
followed their instructions, absent an overwhelming probability that they would be unable
to do so.'" (Quoting State v. Smith, 310 Or 1, 26, 791 P2d 836 (1990))). Under the
circumstances, it was within the court's discretion to conclude that the jury would follow
the direction of the curative instruction to disregard the highlighting. We therefore
conclude that the trial court did not act outside of its range of discretion in giving a
curative instruction, rather than granting defendant's motion for a mistrial.

We turn now to the award of punitive damages on the fraud claim.
Defendant assigns error to the trial court's failure to give its requested jury instruction that
"[y]ou are not to punish a defendant for the impact of its conduct on individuals in other
states." The issue framed by defendant's assignment implicates constitutional principles
under federal due process law and trial practices governed by the law of the State of
Oregon. As background, we begin our discussion with two United States Supreme Court
cases that established the applicable constitutional principle: State Farm Mut.
Automobile Ins. Co. v. Campbell, 538 US 408, 123 S Ct 1513, 155 L Ed 2d 585 (2003)
(Campbell), and BMW of North America, Inc. v. Gore, 517 US 559, 116 S Ct 1589, 134 L
Ed 2d 809 (1996) (Gore).

In Gore, an automobile purchaser brought an action against an automobile
manufacturer for the failure to disclose that a purportedly new automobile had been
repainted after being damaged before delivery occurred. 517 US at 563. The
manufacturer acknowledged that it had a nationwide policy of not advising customers of
predelivery damage to new cars when the cost of repair did not exceed three percent of
the car's suggested retail price. Id. The jury returned a $4 million punitive damage award
against the manufacturer, which was reduced to $2 million by the Alabama Supreme
Court. The United States Supreme Court held, however, that even the reduced award
violated the Due Process Clause because it was grossly excessive in relation to the state's
legitimate interests in punishing and deterring unlawful wrongful conduct. Id. at 573-74.
The Court observed that a state may protect its citizens by prohibiting deceptive trade
practices, but that neither the jury nor the trial court was presented with any evidence that
the manufacturer's out-of-state conduct was unlawful. Indeed, there was testimony that
approximately 60 percent of the vehicles that were repainted were sold in states where
such repairs did not constitute unfair trade practices. Id. at 573. Although the plaintiff
argued that the manufacturer's conduct was particularly reprehensible because the
nondisclosure of repairs regarding his car was part of a nationwide pattern of tortious
conduct, the Court held that the Alabama Supreme Court "properly eschewed reliance on
BMW's out-of-state conduct," id., and that "a State may not impose economic sanctions
on violators of its laws with the intent of changing the tortfeasors' lawful conduct in other
States." Id. at 572.

The above rule was reiterated in Campbell, a case in which the insureds
brought an action in Utah against an automobile liability insurer to recover for a bad-faith
failure to settle within policy limits. Evidence of the insurer's practices both in and out of
state was offered to show that the insurer's actions were tortious--that is, to show that its
practice was deliberate and to rebut the insurer's assertion that its practices were
inadvertent or mistakes in judgment--and to support an award of damages to punish the
insurer for its nationwide practices. The jury awarded the plaintiffs $2.6 million in
compensatory damages and $145 million in punitive damages, which the trial court
reduced to $1 million and $25 million, respectively. 538 US at 415. The Supreme Court,
in reversing the award of punitive damages, stated that, as a general rule, a state does not

"have a legitimate concern in imposing punitive damages to punish a
defendant for unlawful acts committed outside of the State's jurisdiction.
Any proper adjudication of conduct that occurred outside Utah to other
persons would require their inclusion, and, to those parties, the Utah courts,
in the usual case, would need to apply the laws of their relevant
jurisdiction."

538 US at 421-22. The Court also admonished:

"Lawful out-of-state conduct may be probative when it demonstrates the
deliberateness and culpability of the defendant's action in the State where it
is tortious, but the conduct must have a nexus to the specific harm suffered
by the plaintiff. A jury must be instructed, furthermore, that it may not use
evidence of out-of-state conduct to punish a defendant for action that was
lawful in the jurisdiction where it occurred. Gore, 517 U.S., at 572-573
(noting that a State 'does not have the power . . . to punish [a defendant] for
conduct that was lawful where it occurred and that had no impact on [the
State] or its residents'). A basic principle of federalism is that each State
may make its own reasoned judgment about what conduct is permitted or
proscribed within its borders, and each State alone can determine what
measure of punishment, if any, to impose on a defendant who acts within it
jurisdiction."

To recapitulate: Under the Due Process Clause, a state can punish a
defendant for in-state conduct that causes in-state harm. A state also has an interest in
punishing a defendant for its out-of-state conduct that causes in-state harm. Both of those
interests were at issue in this case because of the evidence that plaintiff adduced. As the
Court held in Gore and Campbell, however, a state may not punish a defendant for out-of-state conduct that causes out-of-state harm. The final construct, punishing a defendant for
in-state conduct that causes out-of-state harm, also necessarily depends on the state of the
evidentiary record. For instance, Oregon could make a legitimate policy choice--that is, a
choice that comports with the Due Process Clause--to punish an actor who is conducting a
fraudulent advertising campaign from Oregon that causes harm in a neighboring state. But
the applicability of that construct, like the other constructs, depends on the evidence
adduced at trial and the legal theories of the parties regarding that evidence. We turn,
then, to the evidence in this case.

In this case, plaintiff offered evidence of harm that was caused to
nonresidents by the consumption of defendant's product. Indeed, one witness testified that
there are approximately 500,000 deaths nationwide each year that could be attributed to
cigarette smoking. Plaintiff's theory regarding the use of that kind of evidence was that
defendant's "unlawful misconduct in 50 states is subject to punitive damages in this
courtroom." In turn, defendant sought to limit the jury's use of the evidence of defendant's
out-of-state conduct. It told the trial court, "Philip Morris cannot be punished in this state
for conduct which occurred out of state. [The requested instruction] informs the jury we
cannot be punished for out of state harms." Plaintiff countered that, unlike in Gore,
"defendant's conduct in this case before us * * * would be tortious in any state." The court
ruled that the requested instruction "is out."

The consequence of the trial court's failure to give defendant's requested
instruction in this case is a violation of defendant's due process rights. As the Court aptly
explained in Campbell:

"For a more fundamental reason, however, the Utah courts erred in relying
upon this and other evidence [of out-of-state harm]: The courts awarded
punitive damages to punish and deter conduct that bore no relation to
Campbell's harm. A defendant's dissimilar acts, independent from the acts
upon which liability was premised, may not serve as the basis for punitive
damages. A defendant should be punished for conduct that harmed the
plaintiff, not for being an unsavory individual or business. Due process does
not permit courts, in the calculation of punitive damages, to adjudicate the
merits of other parties' hypothetical claims against a defendant under the
guise of the reprehensibility analysis, but we have no doubt the Utah
Supreme Court did that here."

538 US at 422-23. Consequently, the trial court erred in refusing to give defendant's
requested instruction.

The dissenting members of this court disagree. In their view, the requested
instruction did not accurately state the principle of constitutional law that plaintiff
acknowledges in his brief. However, the arguments made by them in support of their
dissents are not arguments that were made by plaintiff at trial or on appeal. We have
previously summarized plaintiff's position at trial and explained why it was incorrect. On
appeal, plaintiff first argues that "[h]arm to others in or out of state is certainly 'relevant to
the determination of reprehensibility of the defendant's conduct.'" (Quoting Gore, 517 US
at 574 n 21.) As explained above, we agree. Plaintiff's next assertion is that it did not
argue to the jury that defendant ought to be punished for harm to nonresidents caused by
its out-of-state conduct. As we indicated above, the transcript of the closing arguments to
the jury undercuts that assertion. Finally, plaintiff summarily argues, "Defendant's
requested instructions were improper and correctly rejected." In light of plaintiff's
arguments to the trial court and on appeal, we question whether it is appropriate for this
court to consider in this case the abstract notions of law advanced by the dissents.

Nevertheless, we respond to the dissents' arguments as follows. Judge
Armstrong appears to make three arguments, two of which are interrelated. He argues
initially that, because of the mobility of the nation's population, principles of due process
do not prevent a state from punishing a defendant for harm caused to people in other
states. Judge Armstrong also argues that "defendant's proposed instruction was flawed
because it did not distinguish between defendant's conduct in Oregon and its conduct in
other states." ___ Or App at ___ (Armstrong, J., concurring in part, dissenting in part)
(slip op at 6). Finally, he argues that defendant's proposed instruction cut too broadly,
because a jury can in fact award punitive damages to "reflect the fact that the defendant's
unlawful conduct in other states had harmful effects in those states." Id. at ___
(Armstrong, J., concurring in part, dissenting in part) (slip op at 5).

We begin with Judge Armstrong's two interrelated arguments concerning the
mobility of the nation's population and his assertion that the Due Process Clause does not
prevent a state from punishing a defendant for harm caused to people in other states. In
general, the concern in Campbell and Gore is that when a state punishes a defendant for
harm caused in another state--in contrast to using evidence of actions in other states to
show the reprehensibility of the defendant's actions that affected people within the state--it
acts outside its territorial jurisdiction. A state has an interest in protecting its own
consumers and its own economy; however, a state does not have a valid interest under the
Due Process Clause in punishing a defendant for harm that is caused and occurs outside its
jurisdiction. That is a limitation under Campbell and Gore that a jury must be informed
about when it determines the amount of an award of punitive damages. Simply put, Judge
Armstrong's construct that the mobility of the nation's population permits a state to punish
a defendant for harm caused to people in other states is not supported by the reasoning in
Campbell and Gore because it would offend the principles of federalism on which the Due
Process Clause is based.

There is, however, a more fundamental problem with Judge Armstrong's
analytical construct: it is completely divorced from the evidence actually introduced in
this case. At trial, plaintiff offered considerable evidence of defendant's unlawful conduct,
but he offered no evidence of the number of Oregon residents who had switched to Merits
in another state and then moved to Oregon. Moreover, no party at trial made a distinction
between defendant's in-state conduct and its nationwide conduct generally. Rather, after
the trial court refused to give defendant's requested instruction, plaintiff argued
extensively to the jury about the import of defendant's nationwide conduct and why
defendant should be punished for that conduct.

Nonetheless, Judge Armstrong asserts that decedent's "experience is not
unique, and the jury reasonably could infer that many people in Oregon have contracted
tobacco-related diseases and incurred health care costs as a result of defendant's conduct
toward those people when they lived in other states." ___ Or App at ___ (Armstrong, J.,
concurring in part, dissenting in part) (slip op at 4). We think that Judge Armstrong's
example makes our point for us. Decedent began smoking full-flavor cigarettes when she
was a nursing student in Missouri. She opted, rather than quitting smoking, to switch to
defendant's Merit brand after she moved to Oregon. The gravamen of plaintiff's punitive
damages claim against defendant focused on defendant's nationwide conduct while she
was a resident of Oregon and while she was considering quitting smoking. But plaintiff
sought in the trial of this case to punish defendant for all of the harm suffered out-of-state
by nonresidents as a result of the tobacco industry's promotion of its products. That
position runs afoul of the due process concept that a defendant can be punished in a
particular case only for the kind of harm suffered by the plaintiff in that case. There is
simply no evidence in the record that would permit a reasonable factfinder to draw the
inference that Judge Armstrong says would have been available to the jury.

We conclude our response to Judge Armstrong's dissent with several
observations. Under Judge Armstrong's view, Oregon could punish a defendant for harm
caused by out-of-state conduct merely because the person harmed became a resident of
Oregon after the out-of-state harm occurred. That construct punishes a defendant for harm
that has already occurred; it does not in any way further the purpose of an award of
punitive damages to deter a defendant's future conduct. Moreover, if Judge Armstrong's
view were correct, neither Gore nor Campbell, based on their facts, would have come out
the way they did. Essentially, the ramifications of Judge Armstrong's proposed construct
would eviscerate the holdings in Gore and Campbell; there would be no limitation on
punishing a defendant for out-of-state conduct.

We turn now to Judge Rosenblum's dissent. She believes that defendant's
instruction "would have misled the jury into thinking that it could not consider defendant's
out-of-state conduct for any purpose." ___ Or App at ___ (Rosenblum, J., concurring in
part, dissenting in part) (emphasis in original) (slip op at 1). In particular, she faults the
requested instruction for not telling the jury that they could consider evidence of out-of-state conduct for purposes of assessing the reprehensibility of defendant's conduct and for
using the word "impact" instead of the word "harms" to describe the effect of defendant's
out-of-state conduct on "people in other states." Id. at ___ (Rosenblum, J., concurring in
part, dissenting in part) (slip op at 2-3).

Judge Rosenblum's concerns about the jury being misled by the language of
defendant's requested instruction do not engage with the record of this case. Her concerns
focus on the word "punish" and on the phrase "the impact of its conduct on individuals in
other states." The evidentiary record is unequivocal as to how the jury would have
understood the import of those words. As stated above, under plaintiff's theory, the
specific harm suffered by decedent was that she was deceived by defendant into believing
that, by switching to the Merit brand of cigarettes, she would be reducing the harmful
effects of consuming tobacco products. Although plaintiff offered considerable evidence
of defendant's deceitful practices, it offered no specific evidence of how many smokers
were deceived in the way that plaintiff's decedent was deceived or how many smokers
were harmed in the way that decedent was harmed (by not quitting smoking, but rather
switching from full-favor brands). Campbell's admonition is clear: a defendant should be
punished by an award of punitive damages for the conduct that harmed the plaintiff, and
not for other tortious conduct that bore no relation to the harm caused to the plaintiff. It is
in that context that we inquire whether the jurors would have been misled by defendant's
requested instruction.

In particular, Judge Rosenblum takes issue with the word "punish" as used in
defendant's requested instruction. (15) She speculates that the instruction, if given,
would have precluded the jury from considering defendant's out-of-state conduct for the
purpose of demonstrating its reprehensibility. However, that argument takes the requested
instruction out of the context in which defendant proposed that it be given. The
instruction would have been given in the context of all the instructions on punitive
damages which, in language and in effect, told the jury that their consideration of an
award of punitive damages was for the purpose of punishing defendant. For example, one
of the instructions that the court did give told the jury that the factors it could consider in
determining whether to punish defendant included "the total deterrent effect of other
punishment imposed on the defendant as a result of the misconduct." Moreover, nothing
prevented plaintiff from requesting an instruction based on his theory of the probative
value of the evidence. Indeed, plaintiff was not concerned about the meaning of the word
"punish" in defendant's requested instruction or that the jury could have been misled by the
word if the trial court had given the instruction: Plaintiff told the trial court that the law
permitted the jury to punish defendant for its conduct in all 50 states.

Judge Rosenblum's concern about the use of the word "impact" instead of
the word "harm" in the requested instruction is similarly divorced from the record made in
the trial court. The only evidence of out-of-state impact that bore on the issue of punitive
damages in this case was evidence of harm to nonresidents. The parties could have had no
doubt in their minds that the word "impact" referred to the out-of-state harm caused by
defendant's nationwide conduct, as defendant's counsel explained to the trial court in the
presence of plaintiff's counsel. And that understanding affected the presentation of the
case to the jury. With due respect, one can always resort on appeal to a dictionary to find
alternative meanings for words used in a jury instruction or disagree about whether one
word should be used in place of another, but that practice does little to inform the issue of
whether the instruction, as worded, would have misled the jury unless those definitions
engage with what actually happened at trial. Here, the parties and the trial court knew
precisely what defendant's requested instruction referred to as revealed by the record in
this case, and there is no legally cognizable basis for asserting that the jury would have
understood otherwise.

In summary, plaintiff offered evidence at trial of the impact of defendant's
nationwide conduct. He effectively took the position that the jury could consider all
evidence of the harm caused by defendant to nonresidents for the purpose of punishing
defendant, regardless of where that harm originated, telling the court that "defendant's
conduct * * * would be tortious in any state." Plaintiff either disagreed with or missed the
point of defendant's requested instruction that a state has no interest under the Due Process
Clause in punishing a defendant for conduct that occurs and causes harm outside its
territorial jurisdiction. Throughout the colloquy between the parties and the trial court
with regard to defendant's requested instruction, only "out-of-state" conduct was
referenced, and significantly, plaintiff never objected to the requested instruction on any of
the grounds advanced by the dissents. It follows that the dissents' arguments that
defendant's proposed limiting instruction was too broad in scope are unsupported by the
record made in the trial court.

Finally, it is important to keep in mind that trials in Oregon are adversarial
proceedings. Defendant's requested instruction was a correct statement of law as to the
subject that it actually addressed, but the dissents' position would effectively require
defendant to include in its requested jury instruction provisions that would have benefitted
only plaintiff. No party is required under Oregon law to make an argument for another
party or to propose a use of evidence that benefits an adversary. Rather, the responsibility
for requesting an instruction that is based on a party's theory of the case is on that party.
Hernandez,327 Or at 106. That general principle applies here. Plaintiff was the only
party who could benefit from the jury's consideration of the evidence of defendant's out-of-state conduct, and as previously noted, he had the burden of proof on the issues of
liability and punitive damages. The above principle properly allocates the burden of
requesting appropriate jury instructions to the party who advances a particular legal theory
or use of the evidence. In sum, had plaintiff wanted to address the concerns of the
dissents, he could have proposed his own instructions. The dissents' assertions to the
contrary in this case would constitute a radical shift in the practice of law in Oregon's trial
courts if adopted by this court.

We conclude for all of the above reasons that the trial court erred in failing
to give defendant's requested instruction, an instruction that due process of law required.
Consequently, we must vacate the award of punitive damages on the fraud claim as well
on the other claims. Our disposition--remand for a new trial on the amount of punitive
damages--renders moot plaintiff's cross-appeal challenging the reduction in the amount of
punitive damages.

II. THE NEGLIGENCE CLAIM

In his third amended complaint, plaintiff alleged, under the heading "Second
Claim for Relief--Negligence," seven specifications of negligence. In its sixth assignment
of error, defendant claims that the trial court erred in denying its motion for a directed
verdict on what it describes as plaintiff's "assumed duty" negligence specification on the
ground that

"there is no evidence from which a reasonable juror could conclude that
[decedent] ever saw, heard, or relied on any representations made by Philip
Morris regarding smoking and health, much less the 1954 Frank Statement,
upon which plaintiff relies to suggest that Philip Morris assumed a duty to
[decedent]."

We are uncertain to which specification of negligence defendant's motion was directed.
After plaintiff alleged six specifications of negligence in his complaint, he alleged in
paragraph 11 (still under the negligence heading) that defendant "voluntarily assumed a
duty to disclose research, cooperate closely with public health authorities and hold
people's health paramount to all other business considerations." He did not explain how
that allegation related to any of the specifications of negligence. To the extent that
defendant is arguing that plaintiff was required to demonstrate that decedent had to have
knowingly relied on defendant's failure to disclose its research, its argument is answered
by our earlier distinction between negligence and promissory fraud claims; that is, plaintiff
is a member of a group of people for whom defendant assumed a duty of reasonable care.
In other words, for the purpose of plaintiff's negligence claim, he was not required to
demonstrate additionally that decedent expressly relied on defendant's promise to disclose
its research in order to hold defendant liable in negligence, as defendant apparently
contends.

In its seventh assignment of error, defendant posits a separate ground for its
contention that the trial court erred in denying its motion for a directed verdict on
plaintiff's negligence claim. Defendant argued to the trial court that it was entitled to a
directed verdict because "there is no evidence from which a reasonable juror could
conclude that Philip Morris was negligent or that such negligence caused plaintiff's harm
and because plaintiff's negligence claims are preempted by federal law." Defendant thus
sought a directed verdict on all of plaintiff's specifications of negligence; it did not move
for directed verdicts on each specification individually or otherwise separately seek to
remove each specification from the jury's consideration. As a result, as plaintiff points
out, the trial court did not err if there is sufficient evidence to support any one of plaintiff's
specifications, Mauri v. Smith, 324 Or 476, 479, 929 P2d 307 (1996); NW Pac. Indem. v.
Junction City Water Dist., 296 Or 365, 372 n 1, 677 P2d 671 (1984), and that specification
is not preempted by federal law.

Defendant responds by relying on the rule in Whinston v. Kaiser Foundation
Hospital, 309 Or 350, 788 P2d 428 (1990). In that case, the Supreme Court adopted the
"we can't tell" rule for reviewing jury verdicts. 309 Or at 358-59. Under that rule, if a
court submitted more than one specification of negligence to the jury and there was
sufficient evidence to support at least one specification but insufficient evidence to
support another specification, and if it was impossible to tell which specification was the
basis for the jury's verdict, the appellate court could not affirm the judgment based on the
verdict. Rather, the appellate court was required to order a new trial. According to
defendant, we can affirm the negligence judgment in this case under the Whinston rule
only if there is evidence to support all of plaintiff's specifications and none of them is
preempted.

The problem with defendant's argument is, as defendant recognizes, that,
after the trial in this case, the Oregon Supreme Court overruled Whinston in Shoup v. Wal-Mart Stores, Inc., 335 Or 164, 166, 174, 61 P3d 928 (2003). Defendant argues, however,
that the parties relied on Whinston in submitting this case to the jury and that applying
Shoup to this appeal in a retroactive fashion would be unfair. However, even if we were
to apply the Whinston rule, defendant could not prevail. The court in Whinston
emphasized that, in order for a party to avail itself of the "we can't tell" rule, the "party
must have taken some action at trial to remove the unsupported allegations from the jury's
purview." 309 Or at 359. The court suggested that the preferable method of doing so
would be to seek a suitable peremptory instruction on each element or allegation on which
the party believed that it was entitled to prevail as a matter of law. Id. at 359-60. It
specifically stated that, "[b]ecause a motion for directed verdict against a party's entire
case is properly denied if any allegation is supported by the evidence," a blanket motion
for a directed verdict is an insufficient basis for invoking the "we can't tell" rule on appeal.
Id. at 360 (emphasis in original).

In this case, defendant made a blanket motion for a directed verdict on
plaintiff's negligence claims. (16) It therefore did not provide a basis for invoking the
Whinston rule even if we were to hold that the rule applies to this case. (17) It follows
that the issue before us is whether any one specification of negligence is supported by the
evidence. Plaintiff alleged generally that defendant was negligent in "designing, testing,
controlling, processing, manufacturing, assembling, distributing and supplying the Merit
brand of cigarettes * * * in one or more of the following ways." In his third specification
of negligence, plaintiff alleged that defendant was negligent in

"selling and distributing cigarettes which it knew or should have known
contained poisonous and carcinogenic substances capable of causing and
likely to cause numerous serious and fatal injuries and diseases, including
but not limited to cancer of the lungs[.]"

As we have described in the section addressing the fraud claim, there is evidence from
which the jury could infer that defendant supplied its Merit brand to the public, knowing
that its cigarettes contained carcinogenic substances and that smokers would compensate
for the brand's lower tar and nicotine content by consuming more cigarettes to satisfy their
level of addiction. From that evidence the jury could find that defendant negligently
supplied a hazardous product to the public.

Moreover, defendant does not cite any federal statute that expressly
preempts state authority over tobacco sales. (19) In the absence of such a statute, we do
not believe that either Congress's recognition of the economic importance of tobacco or its
decision to prohibit the FDA from regulating nicotine or smokeless tobacco implicitly
preempts state authority. Neither action indicates that state regulation of tobacco sales
conflicts with federal law or that federal law so thoroughly occupies the field that we can
infer that Congress has left no room for the states to act. SeeCipollone, 505 US at 516
(describing criteria for determining congressional preemption of state action). Even if
permitting awards of damages based on plaintiff's specifications of negligence would have
the effect of banning a legal product in a particular state, we find nothing in federal law
that prevents state action in that regard. (20)

With respect to defendant's argument that holding it liable for negligence
will effectively hold it liable for selling a legal product, there is a difference in concept
between the outright banning of a product for sale and permitting the sale of a product but
creating liability for the harm that it causes. Plaintiff alleged that defendant sold and
distributed cigarettes when it knew or should have known that its products contained
harmful substances capable of causing injury and disease. When properly viewed, holding
defendant liable for that conduct falls short of the complete banning of the sale of a
product; rather, such an adjudication constitutes the mere exercise of the state's regulatory
power over a product in the event that it does cause harm. We reject defendant's
arguments and conclude that, because there is sufficient evidentiary support for at least
one specification of negligence and because defendant did not ask the court to rule on each
specification separately, the trial court did not err in submitting plaintiff's negligence claim
to the jury.

Defendant's eighth through eleventh assignments of error involve the trial
court's refusal to give certain instructions on negligence and its giving other instructions
over defendant's objections. The trial court gave instructions that are usually approved for
negligence cases, but defendant asserts that the special circumstances of this case required
special instructions. The legal principles embodied in the instructions that the trial court
gave have broad applicability, and we perceive nothing in them that caused prejudice to
defendant. A further discussion of defendant's assignments in that regard would not
benefit the bench or the bar. In sum, we hold that the trial court did not err in submitting
plaintiff's specifications of negligence to the jury.

The jury also awarded punitive damages on plaintiff's negligence claim.
That award must be vacated for the reason expressed earlier regarding defendant's fraud
claim.

III. THE STRICT PRODUCTS LIABILITY CLAIM

In its twelfth assignment of error, defendant challenges the trial court's
denial of its motion for a directed verdict on plaintiff's strict products liability claim. In
his complaint, plaintiff alleged, in part:

"8.

"At all material times, the cigarettes sold by defendant were defective
and unreasonably dangerous in one or more of the following respects:

"b.The cigarettes or their smoke contained altered pH so as to
increase the effects of nicotine;

"c.At the time defendant's light cigarettes were sold, the product
was dangerous and in a condition not contemplated by the
ultimate consumer in that it was manufactured, marketed, and
sold as a less harmful alternative to ordinary cigarettes."

The jury answered "yes" to the following question: "Was defendant Philip Morris' Merit
brand cigarette defective and unreasonably dangerous to [decedent] when sold and was the
defect a cause of [decedent's] death?"

As with the negligence claim, defendant did not move separately against
each of plaintiff's specifications. Thus, we must affirm the trial court's ruling if any single
specification is legally sustainable and if there is evidence to support it. Defendant moved
for a directed verdict on the ground that

"there is no evidence from which a reasonable juror could conclude that
Merit cigarettes after the repose date, February 1990, were dangerously
defective or that such a defect caused plaintiff's harm, and because plaintiff's
strict liability claims are preempted by federal law."

The legal basis for strict liability for defective products in Oregon is ORS
30.920, which the legislature adopted in 1979. In that statute, the legislature adopted the
substantive terms of Restatement (Second) of Torts § 402A (1965), and stated its intent
that courts interpret the statute consistently with comments a through m of the
Restatement. ORS 30.920(3). Under the statute, the seller of a product that is in a
condition that is unreasonably dangerous to the user or consumer is liable for physical
harm to the user if the seller is engaged in the business of selling that product and if the
product reaches the consumer without substantial change in the condition in which the
seller sold it. ORS 30.920(1).

Defendant emphasizes that it is liable under the statute only if Merit
cigarettes were unreasonably dangerous when it sold them; it points out that comment i to
section 402A states:

"The rule stated in this Section applies only where the defective
condition of the product makes it unreasonably dangerous to the user or
consumer. Many products cannot possibly be made entirely safe for all
consumption, and any food or drug necessarily involves some risk of harm[.]
* * * The article sold must be dangerous to an extent beyond that which
would be contemplated by the ordinary consumer who purchases it, with the
ordinary knowledge common to the community as to its characteristics.
Good whiskey is not unreasonably dangerous merely because it will make
some people drunk, and is especially dangerous to alcoholics; but bad
whiskey, containing a dangerous amount of fuel oil, is unreasonably
dangerous. Good tobacco is not unreasonably dangerous merely because
the effects of smoking may be harmful; but tobacco containing something
like marijuana may be unreasonably dangerous."

(Emphasis added.) According to defendant, it follows that it cannot be held liable to
plaintiff because all that plaintiff demonstrated was the harmful effects of smoking. We
disagree for the reasons that follow.

In McCathern v. Toyota Motor Corp., 332 Or 59, 75-76, 23 P3d 320 (2001),
the Supreme Court emphasized, consistently with comment i, that ORS 30.920 creates a
"consumer expectation" test for determining when a product is defective. "[T]he plaintiff
must prove that, when the product left the defendant's hands, the product was defective
and dangerous to an extent beyond that which the ordinary consumer would have
expected." Id. at 79 (emphasis added); see also Benjamin v. Wal-Mart Stores, Inc.

, 185 Or
App 444, 460-61, 61 P3d 257 (2002), rev den, 335 Or 479 (2003) (applying McCathern
analysis). The fact that cigarettes are dangerous does not, as comment iindicates,
necessarily make them defective for purposes of the statute. In other words, a reasonable
consumer would expect cigarette products to be dangerous, in part because of the federally
required warning and in part because of other readily available information. However,
that is not the end of the question. If a product is dangerous to an extent beyond that
which consumers would have reasonably expected, then liability arises under the statute.
We turn then to the record to determine if there is evidence from which a reasonable juror
could infer that the Merit brand was more dangerous than a reasonable consumer would
have expected.

Defendant argues, nevertheless, that none of those changes made the Merit
brand more dangerous to decedent. It points out that plaintiff's own expert testified that
decedent was addicted to tobacco within two or three years after she began smoking,
which was long before she switched to Merit. Thus, according to defendant, whatever
changes it made could not have harmed decedent. That argument fails to consider that the
jury could have found from the evidence that decedent switched to the Merit brand as "a
halfway step to get off the medicine--off the cigarettes." Moreover, if, as the jury could
have found, using the Merit brand caused decedent to smoke more than if she had
continued smoking full-flavor brands, then it could have also found that defendant's
modifications made it more difficult for consumers such as decedent to quit smoking
entirely.

Finally, defendant argues that plaintiff's claim that the Merit brand is
dangerously defective because of the added ammonia and urea is preempted because such
a claim is tantamount to imposing a duty to give warnings in addition to those that the
federal law requires. We disagree. As the Cipollone Court held, not all state law claims
are preempted by 15 USC section 1334(b). Apart from the issue of the wording of label
and advertisement warnings being preempted by federal law, there is also the issue under
ORS 30.920(1) of the effect on reasonable consumers of defendant's nondisclosure of its
research results to the public health community and the effect of that nondisclosure on the
recommendations made by that community to consumers. The jury could have viewed
defendant's conduct in that regard as distinct from its conduct relating to compliance with
federal warning mandates. Defendant could have avoided liability under the statute in this
case, not by making additional warnings, but by disclosing what it knew about its product
to the public health community and, ultimately, the consumer public. We conclude
therefore that the trial court did not err in denying defendant's motion for a directed verdict
on plaintiff's strict products liability claim for all the reasons expressed above.

For the reasons expressed with regard to plaintiff's fraud claim, the award of
punitive damages on the strict liability claim must also be vacated.

On appeal, award of punitive damages vacated and remanded for new trial
limited to determination of amount of punitive damages; otherwise affirmed. Cross-appeal dismissed as moot.

LINDER, J., concurring.

I agree with the majority that the trial court erred in failing to give the jury
an instruction that would properly channel its consideration of the evidence regarding the
effect of defendant's conduct on people in other states. I also agree that the error requires
a reversal and a remand. In my view, that remedy follows regardless of the correctness
of defendant's proffered instruction.

The situation here is analogous to State v. George, 337 Or 329, 97 P3d 656
(2004). There, in his trial to a jury for aggravated murder, the defendant raised an
insanity defense. As a result, ORS 161.313 required the trial court to "instruct the jury in
accordance with ORS 161.327," which sets out the consequences of a verdict of guilty
except for insanity. The defendant objected to the uniform instruction designed to
comply with ORS 161.313 and proffered an alternative instruction that the defendant
believed was more accurate. The trial court, however, concluded that the jury should not
be advised at all of the consequences of a guilty except for insanity verdict. The trial
court therefore refused to give any instruction on the point.

On appeal, the defendant challenged the trial court's refusal to give his
requested instruction. Our court took a narrow view of the defendant's argument. We
concluded that he had raised only the issue of whether his proffered instruction should
have been given, not the issue of whether the trial court erred in failing to give any
instruction on the point. Because the defendant's proffered instruction was not an
accurate statement of the law, we rejected his challenge to the trial court's failure to give
it. State v. George, 183 Or App 583, 589-90, 54 P3d 619 (2002).

On review, the Supreme Court agreed that the defendant's requested
instruction was not accurate. That court, however, believed that the issue was broader
and that the defendant had adequately raised the related question of whether the trial court
failed in its obligation to give some instruction that comported with ORS 161.313.
George, 337 Or at 336-37. Addressing the merits, the court concluded:

"The answer, on the merits, is inescapable. ORS 161.313 provides
that, when a defendant's sanity is an issue, the trial court 'shall instruct the
jury in accordance with ORS 161.327.' As we already have noted, that
statute unequivocally requires the trial court to give an instruction in
accordance with ORS 161.327. The trial court failed to so instruct the jury
and, in failing to do so, erred."

Id. at 340 (emphasis in George).

In reaching that conclusion, the court rejected the state's argument that the
defendant's failure to proffer an accurate instruction precluded the defendant's challenge.
The court did so for two independent reasons:

"Although the state's position accurately reflects the approach that we
ordinarily take regarding preservation of jury instruction issues, we reject
that argument here for two reasons. First, it cannot be squared with the fact
that ORS 161.313 unequivocally places the responsibility for giving the
required instruction on the trial court, without regard to whether the
defendant wants or requests such an instruction, much less offers one that is
a correct statement of the law. Second, the state's argument ignores the fact
that, at the relevant time, the trial court already had announced that * * * it
would not give the uniform instruction to the jury, 'nor would [it] give a
variation of it.' In view of that announcement, defendant reasonably could
assume that attempting to formulate a revised instruction that comported
with the requirement of ORS 161.313 would have been an exercise in
futility. Our requirements respecting preservation do not demand that
parties make what the record demonstrates would be futile gestures."

Under the court's analysis in George, the correctness of defendant's
proffered instruction is of no moment, because the trial court was required by the federal
constitution to give a correct instruction regardless of defendant's request or the
correctness of its proffered instruction. As the majority in this case explains, in State
Farm Mut. Automobile Ins. Co. v. Campbell, 538 US 408, 422, 123 S Ct 1513, 155 L Ed
2d 585 (2003), the United States Supreme Court held that, as a requirement of due
process, a jury "must be instructed" on the limitations of its consideration of evidence of a
defendant's out-of-state conduct. The Court's declaration in that regard was unqualified.
That is, the Court did not suggest that such an instruction is necessary only if requested.
Rather, the Court held that such an instruction is necessary so that the jury's deliberations
are constrained consistently with the federal due process limitations on a state's power to
punish a defendant's conduct. Id. Just as the trial court in George was required to instruct
the jury on the consequences of a guilty except for insanity verdict, so too was the trial
court in this case required to guide the jury's consideration of the evidence of out-of-state
conduct and out-of-state harm.

The correctness of defendant's proffered instruction also is of no moment
for the second reason identified in George--that is, the trial court was unwilling to give
any instruction limiting the jury's consideration of the out-of-state evidence. The issue, as
framed by the parties, posed an all or nothing proposition. Plaintiff's position was that no
limitation was required, because defendant's conduct was unlawful in all jurisdictions.
Defendant's position was that the jury was not entitled to award punitive damages based
on its out-of-state conduct and harm to individuals in other states. The trial court agreed
with plaintiff. As in George, given the trial court's reasons for rejecting defendant's
proffered instruction, any effort by defendant to reformulate its requested instruction
would have been an exercise in futility.

In sum, in failing to give a limiting instruction required by the Due Process
Clause, the trial court erred. Under George, regardless of the correctness of the
instruction that defendant requested, the case must be remanded for a new determination
of the amount of punitive damages.

ARMSTRONG, J., concurring in part, dissenting in part.

I agree with the majority in its disposition of all of defendant's assignments
of error except for one. The majority erroneously concludes that one of defendant's
proposed instructions on punitive damages correctly stated one of the limits imposed by
the Due Process Clause on the award of punitive damages in this case. The proposed
instruction did not correctly state the applicable limit. Hence, the trial court did not err in
refusing to give it.

Defendant asked the court to give the following instruction:

"You are not to punish a defendant for the impact of its conduct on
individuals in other states."

The majority concludes that the instruction stated the legal principle, established in BMW
of North America, Inc. v. Gore, 517 US 559, 116 S Ct 1589, 134 L Ed 2d 809 (1996), and
later confirmed in State Farm Mut. Automobile Ins. Co. v. Campbell, 538 US 408, 123 S
Ct 1513, 155 L Ed 585 (2003), that the Supreme Court requires to be conveyed to a jury
at a defendant's request. See ___ Or App at ___ (slip op at 31, 36-37). Contrary to the
majority's view, the instruction did not state the principle that the Court established in
Gore.

Gore established that a state "does not have the power * * * to punish [a
defendant] for conduct that was lawful where it occurred and that had no impact [on the
state] or its residents." 517 US at 572-73 (footnote omitted). The Court confirmed in
Campbell that a jury must be told of that principle in appropriate cases:

"A jury must be instructed, furthermore, that it may not use evidence of out-of-state conduct to punish a defendant for action that was lawful in the
jurisdiction where it occurred. Gore, 517 U.S. at 572-573 (noting that a
State 'does not have the power . . . to punish [a defendant] for conduct that
was lawful where it occurred and that had no impact on [the State] or its
residents')."

538 US at 422.

Defendant did not request an instruction that stated that principle. In fact,
plaintiff argued to the trial court that Gore stood for the principle that evidence of
defendant's lawful conduct in other states could not be used to punish defendant in
Oregon, but that the conduct at issue in this case was unlawful in every state, so an
instruction stating the principle that Gore established would not be appropriate. It was
that argument that appears to have led the trial court to reject defendant's proposed
instruction. Gore was solely concerned with one state's ability to punish a defendant for
the defendant's lawful conduct in other states. In that light, it should be evident that the
majority is simply wrong to say that defendant's proposed instruction is an instruction
required by Gore.

That principle is consistent with a principle that was critical to the decision
in Gore. The Court was careful in Gore to make clear that the limitation that it imposed
was a limitation on the power of a state "to punish [a defendant] for conduct that was
lawful where it occurred and that had no impact on [the State] or its residents." 517 US
at 573 (emphasis added). Campbell extended that principle to apply to the imposition of
punitive damages by a state for unlawful conduct in other states that had no impact on the
state or its residents.

In a tobacco case such as this, however, defendant's conduct in other states
that causes harm to people in those states can have an effect on Oregon and its residents.
The conduct at issue in this case was conduct that was nationwide in scope, it extended
over decades, and it endangered the health of people throughout the country. Because of
the mobility of people in our country, each state can be adversely affected by the health-care costs incurred in the state as a result of tobacco-related diseases contracted by people
who move to the state after having been induced to purchase and smoke cigarettes in
other states by defendant's unlawful conduct in those states.

For example, Michelle Schwarz began smoking full-flavor cigarettes when
she was a nursing student in Missouri. She later moved to Oregon, where she eventually
switched to Merit cigarettes, contracted lung cancer, and died. Her experience is not
unique, and the jury reasonably could infer that many people in Oregon have contracted
tobacco-related diseases and incurred health-care costs as a result of defendant's conduct
toward those people when they lived in other states. Consequently, Oregon and its
residents can be affected by defendant's unlawful conduct in other states that affected
people in other states. Because Oregon and its residents can be affected in that way, it
may be permissible under the Due Process Clause for Oregon to punish defendant for the
effect of its unlawful conduct on people in other states. In other words, in a case such as
this, it may be permissible for Oregon to punish defendant to deter its unlawful conduct in
other states toward people in those states. If so, then defendant's proposed instruction
was unquestionably an erroneous instruction, and the trial court did not err in refusing to
give it.

The majority understands Campbell to sweep more broadly and to stand for
the principle that an Oregon jury cannot, under any circumstances, punish a defendant for
the effect in other states of the defendant's unlawful conduct in those states. Even if that
understanding of Campbell is correct, that does not mean that a jury cannot award
punitive damages that reflect the fact that the defendant's unlawful conduct in other states
had harmful effects in those states. Gore recognized that distinction in explaining the
relationship between the imposition of punishment for lawful conduct in other states and
the manner in which a state can impose punishment that reflects the fact that the
defendant's unlawful conduct in other states caused harm in those states:

"Our cases concerning recidivist statutes are not to the contrary. Habitual
offender statutes permit the sentencing court to enhance a defendant's
punishment for a crime in light of prior convictions, including convictions
in foreign jurisdictions. A sentencing judge may even consider past
criminal behavior which did not result in a conviction and lawful conduct
that bears on the defendant's character and prospects for rehabilitation. But
we have never held that a sentencing court could properly punish lawful
conduct. This distinction is precisely the one that we draw here."

517 US at 573 n 19 (emphasis in original; citations omitted).

For example, a court imposing punishment on a defendant who has
committed manslaughter in two states cannot sentence the defendant for the manslaughter
in the other state, but the punishment that the court imposes can be based on the fact that
the defendant committed manslaughter in two states. In this case, that means that the
punishment imposed by an Oregon jury for the effect on plaintiff of defendant's unlawful
conduct can be based on the fact that that conduct affected people in other states in the
same way that it affected plaintiff, subject to the limit imposed by the Due Process Clause
on the size of the award. In other words, the jury could punish defendant more severely
in Oregon because of the fact that the unlawful conduct that harmed plaintiff also harmed
people in other states. What the jury could not do is to punish defendant specifically and
independently for the effect of its unlawful conduct on people in other states. Defendant's
proposed instruction would have misled the jury by telling it that it could not punish
defendant at all for the effect of its conduct on people in other states. Because the
instruction would have misled the jury in that way, the trial court did not err in refusing to
give it. See, e.g., Beglau v. Albertus, 272 Or 170, 179, 536 P2d 1251 (1975) ("It is
fundamental that a request for an instruction may properly be denied, without error, unless
the requested instruction is clear and correct in all respects, both in form and in substance,
and unless it is altogether free from error."); see alsoBennett v. Farmers Ins. Co. of
Oregon, 332 Or 138, 153, 26 P3d 785 (2001).

My conclusion that the proper disposition of defendant's appeal is to affirm
on defendant's assignments of error necessarily means that I disagree with the majority
that plaintiff's cross-appeal is moot. Plaintiff assigns error to the trial court's decision to
reduce plaintiff's award of punitive damages from the $150 million that the jury awarded
to $100 million. For the following reasons, I conclude that the trial court erred in
reducing the award.

Punitive damages in Oregon "have a salutary effect in two respects[: they]
visit the wrong-doer with wholesome punishment, and afford an example calculated to
deter others from the commission of malevolent acts[.]" Sullivan v. Oreg. Ry. & N. Co.,
12 Or 392, 404, 7 P 508 (1885); see also Martin v. Cambas, 134 Or 257, 261, 293 P 601
(1930) ("The generally accepted doctrine is that [punitive] damages are awarded by way
of punishment to the offender and as a warning to others, or, according to some
authorities, by way of example."). However, the United States Supreme Court has
explained that "[e]lementary notions of fairness enshrined in our constitutional
jurisprudence dictate that a person receive fair notice not only of the conduct that will
subject him to punishment, but also of the severity of the penalty that a State may impose"
for that conduct. Gore, 517 US at 574. Thus, the Due Process Clause "imposes
substantive limits 'beyond which penalties may not go.'" TXO Production Corp. v.
Alliance Resources Corp., 509 US 443, 453-54, 113 S Ct 2711, 125 L Ed 2d 366 (1993)
(quoting Seaboard Air Line R. Co. v. Seegers, 207 US 73, 78, 28 S Ct 28, 52 L Ed 108
(1907)). Where a state imposes a "grossly excessive" punitive damage award against a
tortfeasor, it transgresses those constitutional limits. Gore, 517 US at 562. A court's task
on review of a punitive damage award is to subject it to "[e]xacting appellate review" to
determine whether it is grossly excessive, Campbell, 538 US at 418, which presents a
legal rather than a factual issue. Parrott v. Carr Chevrolet, Inc., 331 Or 537, 555, 17 P3d
473 (2001).

The United States Supreme Court has identified three guideposts to assist
courts in assessing whether a punitive damage award is grossly excessive: "(1) the degree
of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or
potential harm suffered by the plaintiff and the punitive damage award; and (3) the
difference between the punitive damages awarded by the jury and the civil penalties
authorized or imposed in comparable cases." Campbell, 538 US at 418 (citing Gore, 517
US at 575). Those guideposts are designed to serve the constitutional concerns about
notice and fairness. I examine the punitive damage award in this case in relation to each
guidepost in turn.

The "most important indicium of the reasonableness of a punitive damages
award is the degree of reprehensibility of the defendant's conduct." Gore, 517 US at 575.
The United States Supreme Court has explained that a court should consider the
following in analyzing the reprehensibility of a defendant's conduct:

"[(1) whether] the harm caused was physical as opposed to economic; [(2)
whether] the tortious conduct evinced an indifference to or a reckless
disregard of the health or safety of others; [(3) whether] the target of the
conduct had financial vulnerability; [(4) whether] the conduct involved
repeated actions or was an isolated incident; and [(5) whether] the harm was
the result of intentional malice, trickery, or deceit, or mere accident."

Campbell, 538 US at 419.

Defendant's conduct in this case is remarkably similar to the conduct of the
defendant in Williams v. Philip Morris, Inc., 340 Or 35, 63, 127 P3d 1165 (2006)
(Williams IV), that the Oregon Supreme Court concluded was "extraordinarily
reprehensible." In that case, the court held that a punitive damages award of $79.5
million against a tobacco company was not grossly excessive. The evidence supporting
the underlying fraud and negligence claims in Williams IV is largely similar to the
evidence in this case. Williams IV, however, did not involve allegations that the
marketing of low-tar cigarettes constituted fraud. Rather, the claims in that case were
based on the defendant's

"40-year publicity campaign * * * to undercut published concerns about the
dangers of smoking. [The defendant] and the tobacco industry had known
for most of those 40 years, if not all of them, that smoking was dangerous.
Nevertheless, they tried to create in the public mind the impression that
there were legitimate reasons to doubt the danger of smoking. [The
defendant] and the tobacco industry did so to give smokers a reason to keep
smoking (or, perhaps more accurately, to undermine one of the main
incentives for smokers to stop smoking)."

Id. at 39 (citations omitted). On the facts in that case, the Oregon Supreme Court
concluded that the defendant's conduct met four of the five reprehensibility factors that
had been identified by the United States Supreme Court. Id. at 56.

Defendant's conduct in this case satisfies those same four reprehensibility
factors. The harm was plainly physical rather than economic--as a result of defendant's
conduct, plaintiff developed lung cancer, which metastasized to her brain and ultimately
caused her death. As did the defendant in Williams IV, this defendant "showed
indifference to and reckless disregard for the safety not just of [decedent], but of
countless other Oregonians, when it knowingly spread false or misleading information to
keep smokers smoking." Id. Furthermore, defendant's conduct was repeated and,
because it was fraudulent, was the result of deceit. There can be no serious debate on the
question of the reprehensibility of defendant's conduct.

The second guidepost is the "the disparity between the actual or potential
harm suffered by the plaintiff and the punitive damages award." Campbell, 538 US at
418. At trial, as on appeal, defendant emphasized the disparity between the $150 million
punitive damage award and the $168,514.22 compensatory damage award. From the trial
court's oral ruling on defendant's motion to reduce or eliminate the punitive damage
award, it appears that the court's motivation for reducing the punitive damage award was
to address that disparity.

"The second * * * guidepost examines the ratio between the punitive
damage award and the actual or potential harm to the plaintiff." Williams IV, 340 Or at
48 (citing Campbell, 538 US at 424) (emphasis added). However, the United States
Supreme Court has "consistently rejected the notion that the constitutional line is marked
by a simple mathematical formula, even one that compares actual and potential damages
to the punitive award." Gore, 517 US at 582 (emphasis in original). In Campbell, the
Court "decline[d] again to impose a bright-line ratio which a punitive damages award
cannot exceed." 538 US at 425.

The numerator in the ratio in this case is $150 million dollars. That much is
simple. Determining the denominator presents more of a challenge.

In Williams IV, the Oregon Supreme Court made clear that, in calculating
the denominator, a court should look only at the harm to this plaintiff and not at harm to
others. 340 Or at 61. However, a court may consider the actual as well as the potential
harm to this plaintiff. Id. at 60.

The jury valued the actual harm to plaintiff at $168,514.22. Michelle
Schwarz's medical bills totalled $118,514.22, and the jury awarded her $50,000 in general
damages for pain and suffering. Michelle Schwarz was diagnosed with lung cancer in
February 1998 and died in July 1999. Hence, she battled cancer for a period of
approximately 17 months. Had she lived longer, her medical bills could have
accumulated to at least $250,000. See Williams IV, 340 Or at 60 (noting that the
plaintiff's medical bills for lung cancer treatment "could easily have been 10 or more
times the [$25,000] awarded here"). Similarly, "[o]nly chance saved [defendant] from a
much higher [general] damage award." Id. We know from the Williams IV decision that
death by lung cancer has the potential to cause pain and suffering that a jury could value
at at least $800,000. Id. at 44.

Thus, at a minimum, the denominator in the ratio in this case is $1,050,000
($250,000 in potential medical expenses and $800,000 in potential general damages). Of
course, the denominator could have been an even larger number. Causing a human being
to develop lung cancer and die is a risky business that is not for the faint of heart; it is
impossible to predict exactly how much pain and how many medical bills that person will
be forced to endure. We could very easily say that the potential harm to Michelle
Schwarz from defendant's fraud and negligence was $37.5 million, based on a
compensatory damage award that a jury returned in a Florida case. See Harold C. Reeder,
The 'Law of Tobacco' Is a Major Contributing Factor that Hampers Effective Resolution
to the Country's Tobacco Problem, 6 Fla Coastal L Rev 17, 48 (2004) (describing the
$37.5 million in compensatory damages awarded to John Lukacs).

As the Oregon Supreme Court has explained, analyzing the third guidepost

"requires three steps. First, courts must identify comparable civil or
criminal sanctions. Second, courts must consider how serious the
comparable sanctions are, relative to the universe of sanctions that the
legislature authorizes to punish inappropriate conduct. Third, courts must
then evaluate the punitive damage award in light of the relative severity of
the comparable sanctions. The guidepost may militate against a significant
punitive damage award if the state's comparable sanctions are mild, trivial,
or nonexistent. However, the guidepost will support a more significant
punitive damages award when the state's comparable sanctions are severe."

Williams IV, 340 Or at 58. For the reasons that follow, I conclude that the state's
comparable sanctions are severe and, thus, justify a more significant punitive damage
award.

The parties have not identified comparable civil sanctions under state law.
However, defendant's conduct in this case is not unlike the conduct prohibited by the
Oregon Unlawful Trade Practices Act. That act provides that a person engages in an
unlawful trade practice when it, among other things, "[r]epresents that * * * goods * * *
have sponsorship, approval, characteristics, ingredients, uses, benefits, quantities or
qualities that they do not have * * *." ORS 646.608(1)(e) (emphasis added). Here, the
jury could have concluded from the evidence that defendant represented Merit brand
cigarettes to be a less dangerous alternative to full-flavor cigarettes--a characteristic or
quality that Merit cigarettes do not, in fact, have. Under ORS 646.632, a prosecuting
attorney can bring an action against a person engaging in unlawful trade practices. In
such an action, the prosecuting attorney can recover, on behalf of the state, a civil penalty
of $25,000 for each violation, "if the court finds that a person is willfully using or has
willfully used [an unfair trade practice]." ORS 646.642(3). The facts in this case could
easily support a conclusion that defendant willfully misrepresented that Merit brand
cigarettes were a less risky alternative to full-flavor cigarettes when it knew that they
were not. The record suggests that Michelle Schwarz smoked a pack a day of Merit brand
cigarettes from 1976 until at least 1998--when she was diagnosed with cancer. Thus,
defendant sold 365 packs of Merit brand cigarettes to decedent per year for 22 years, for a
total of 8,030 packs of Merit brand cigarettes. Each sale of a pack of cigarettes
constituted a violation of the Unlawful Trade Practices Act. Thus, a prosecuting attorney
could have sought a civil penalty of $200,750,000 against defendant for its sales of Merit
brand cigarettes to Michelle Schwarz. Thus, the comparable civil sanctions are severe
indeed.

The comparable criminal sanctions are as well. Based on conduct similar to
defendant's conduct in this case, the Oregon Supreme Court concluded in Williams IV that
the conduct of the defendant in that case "would constitute at least second-degree
manslaughter, a Class B felony." 340 Or at 59 (citing ORS 163.125(1)(a)). As the
Oregon Supreme Court noted, "[i]ndividuals who commit Class B felonies may face up to
10 years in prison and a fine of up to $250,000." Id. at 59-60 (citing ORS 161.605(2) and
ORS 161.625(c)). Thus, the legislature has seen fit to prescribe incarceration for
individuals who behave as defendant has in this case, and the deprivation of one's liberty
is a severe penalty indeed. Of course, one cannot incarcerate a corporation. Instead,
"[c]orporations that commit a felony of any class may be fined up to $50,000, or required
to pay up to twice the amount that the corporation gained by committing the offense." Id.
(citing ORS 161.655(1)(a), (3)). Hence, the criminal penalty that could be imposed
against defendant for its conduct in causing Michelle's death is at least $50,000.

In short, comparable civil and criminal sanctions for defendant's conduct
could exceed $150 million. As a result, the third guidepost supports a similar punitive
damage award.

Having reviewed the punitive damage award in relation to the three
guideposts, we find ourselves in the same situation in which the Oregon Supreme Court
found itself in Williams IV. That is, of the three guideposts, "two support a very
significant punitive damage award. One guidepost--the ratio--cuts the other way."
Williams IV, 340 Or at 62-63. Because of the similarity between the two cases, it is
useful to set forth the Oregon Supreme Court's analysis:

"The * * * guideposts are not bright-line tests. See, e.g., Campbell,
538 US at 425 ('there are no rigid benchmarks that a punitive damages
award may not surpass'); see also Gore, 517 US at 582 ('we have
consistently rejected the notion that the constitutional line is marked by a
simple mathematical formula'). In other words, the guideposts are only
that--guideposts. Gore also referred to them as indicia. 517 US at 575
(reprehensibility is 'most important indicium'); id. at 580 (ratio is 'second
and perhaps most commonly cited indicium'); id. at 583 (comparable
sanctions 'provides a third indicium for excessiveness'). Campbell
specifically contemplated that some awards exceeding single-digit ratios
would satisfy due process. See [538 US] at 425 ('in practice, few awards
exceeding a single-digit ratio between punitive and compensatory damages,
to a significant degree, will satisfy due process'). Single-digit ratios may
mark the boundary in ordinary cases, but the absence of bright-line rules
necessarily suggests that the other two guideposts--reprehensibility and
comparable sanctions--can provide a basis for overriding the concern that
may arise from a [higher] ratio.

"And this is by no means an ordinary case. [The defendant's]
conduct here was extraordinarily reprehensible, by any measure of which
we are aware. It put a significant number of victims at profound risk for an
extended period of time. The State of Oregon treats such conduct as
grounds for a severe criminal sanction, but even that did not dissuade [the
defendant] from pursuing its scheme.

"In summary, [the defendant], with others, engaged in a massive,
continuous, near-half-century scheme to defraud the plaintiff and many
others, even when [the defendant] had reasons to suspect--and for two or
more decades absolutely knew--that the scheme was damaging the health of
a very large group of Oregonians--the smoking public--and was killing a
number of that group. Under such extreme and outrageous circumstances,
we conclude that the jury's $79.5 million punitive damage award against
[the defendant] comported with due process, as we understand that standard
to relate to punitive damage awards."

340 Or at 63-64 (emphasis in original).

Although defendant's low-tar fraud may be of more recent vintage than the
fraud at issue in Williams IV, defendant's conduct with regard to low-tar cigarettes is no
less "extreme and outrageous" than the conduct at issue in Williams IV. In fact,
defendant's low-tar fraud was even more "extraordinarily reprehensible" in that it
demonstrated another level of sophistication in defendant's campaign of deception. That
is, not only did defendant try to create doubt in the mind of the consumer about the
dangers of smoking, but it also offered those smokers whose concerns lingered a
purportedly less hazardous alternative--an alternative that defendant knew was no less
hazardous. Furthermore, defendant's conduct exposed it to civil and criminal liability in
the hundreds of millions of dollars. For those reasons, I would conclude that the
reprehensibility of defendant's conduct and the comparable civil and criminal sanctions
override any concern that arises from the ratio between compensatory and punitive
damages in this case. The jury's $150 million punitive damage award was not grossly
excessive and comported with the requirements of due process. Thus, the trial court erred
in reducing the punitive damage award in this case from $150 million to $100 million.

In sum, the jury's original $150 million punitive damages award complied
with the federal Due Process Clause. The trial court erred in reducing the award.
Therefore, the proper disposition of plaintiff's cross-appeal is to reverse the trial court's
judgment and remand with instructions to enter a judgment in accordance with the jury's
verdict. The majority errs in failing to do that.

Wollheim, Ortega, and Rosenblum, JJ., join in this dissent.

ROSENBLUM, J., concurring in part, dissenting in part.

I join in Judge Armstrong's opinion, but write separately to emphasize one
of his points and to clarify my understanding of it--namely, that the proposed instruction
was properly rejected because it would very likely have produced confusion in the minds
of the jurors and misled them about the use they could make of evidence of out-of-state
harms and of defendant's out-of-state conduct. Under State Farm Mut. Automobile Ins.
Co. v. Campbell, 538 US 408, 427, 123 S Ct 1513, 155 L Ed 2d 585 (2003) (Campbell),
and BMW of North America, Inc. v. Gore, 517 US 559, 116 S Ct 1589, 134 L Ed 2d 809
(1996) (Gore), in assessing punitive damages, a jury is permitted to consider out-of-state
conduct in determining the reprehensibility of the defendant's conduct. See Gore, 517 US
at 574 n 21; see also Campbell, 538 US at 419 ("'[T]he most important indicium of the
reasonableness of a punitive damages award is the degree of reprehensibility of the
defendant's conduct.'" (Quoting Gore, 517 US at 575; brackets in Campbell.)). The
proposed instruction stated, "You are not to punish a defendant for the impact of its
conduct on individuals in other states." That instruction would have misled the jury into
thinking that it could not consider defendant's out-of-state conduct for any purpose.

The majority questions whether that issue is properly before us. __ Or App
at __ (slip op at 38). It notes that the trial court did not exclude the proposed instruction
on the ground that it was misleading and suggests that plaintiff has not adequately
advanced the argument on appeal as an alternative basis for affirmance. I disagree.
Plaintiff argued to this court that the instruction was properly excluded because it did not
reflect the principle that "out of state conduct and harms caused thereby are * * * relevant
to reprehensibility." Thus, the argument is properly before us. I turn to it now.

I find two serious interrelated flaws in the proposed instruction. The first
lies in the word "punish." I believe that, in the minds of the jurors in a case of this type,
"punitive damages" and "punishment" are synonymous. Although, in Campbell, the
Supreme Court distinguished between "punishing" a defendant directly for harms
occurring out-of-state and using evidence of out-of-state conduct in assessing
reprehensibility, the proposed instruction in this case made no such distinction. Had the
jury been given that instruction without further guidance, it would not have been likely to
draw that distinction for itself. Thus, had the jury been instructed that it could not
"punish a defendant for the impact of its conduct on individuals in other states," the jurors
would likely have inferred that they could not consider such conduct at all in determining
the appropriate amount of punitive damages. See White v. Ford Motor Co., 312 F3d 998,
1016 n 69 (9th Cir 2002) ("In some cases the distinction between using the evidence as it
bears on reprehensibility but not as a measure of damages might be so gossamer as to be
difficult for a jury to apply * * *."); see also Steven R. Hamlin, Punitive Damages after
Campbell: The Role of Out-of-State Conduct, 28 Campbell L Rev 63, 75 (2005)
(questioning how holding that out-of-state conduct may be used to determine
reprehensibility can be squared with admonition that such conduct may not be used to
punish the defendant).

The second flaw in defendant's proposed instruction lies in the word
"impact." It appears from the instruction conference with the trial court that defendant
intended to convey to the jury that it could not punish defendant for the harms that its out-of-state conduct wrought on people in other states. But that is not what the proposed
instruction said. The proposed instruction said that the jury could not punish defendant
for the "impact of its conduct on individuals in other states." (Emphasis added.)
"Impact" is not an especially precise word. It could mean, for example, "the act of
impinging or striking (as of one body against another or of a stream squarely against a
fixed or moving surface)." Webster's Third New Int'l Dictionary 1131 (unabridged ed
2002). Defendant might have intended its proposed instruction to convey that direct and
immediate sort of impact--in other words, to inform the jury that it could not impose
punitive damages as retribution for particular harms suffered by people in other states.

However, regardless of what defendant intended, the jury could have
inferred that the instruction had a broader meaning. "Impact" can also mean "the effect or
influence of one person, thing, or action on another." The New Oxford American
Dictionary 851 (1st ed 2001). Under that definition, the proposed instruction could have
been understood to be even more restrictive. The jury may have understood the proposed
instruction to prevent them from considering anything occurring out-of-state in assessing
reprehensibility.

The majority insists that it was not defendant's burden to propose an
instruction that would clarify for the jury how evidence of defendant's out-of-state
conduct should play into its assessment of punitive damages, because defendant was
under no obligation to propose an instruction that would benefit plaintiff. __ Or App at
__ (slip op at 45). In my view, however, it was defendant's burden, in crafting a limiting
instruction, to propose one that was not overly broad or misleading. Because defendant's
proposed instruction would have conveyed to the jury that it could not consider evidence
that it was entitled to consider in assessing punitive damages, the trial court did not err in
refusing to give the instruction.

2. At trial, the parties referred to "full-flavor brands" as cigarette brands that did not
claim to make a significant reduction in the smoker's exposure to substances that are ordinarily
present in tobacco smoke.

3. Plaintiff's third amended complaint was organized into three "claims for relief."
The first was entitled "Products Liability"; the second was entitled "Negligence"; and the third
was entitled "Fraud." Finally, the complaint included a section entitled "Punitive Damages."
Under each heading, plaintiff included a number of specifications.

4. Justice Stevens authored the opinion on which we rely. That opinion is, in part,
the opinion of the Court and, in part, an opinion of the plurality. In common with most other
courts, we conclude that, in light of the views expressed in the separate concurring and
dissenting opinions of Justices Blackmun and Scalia, the entirety of Justice Stevens's opinion
states the holding of the Court.

6. To repeat, throughout this opinion, we are reciting the evidence that favors
plaintiff. Defendant produced evidence that disputed much of the above evidence. However, the
jury was entitled to accept plaintiff's view of the evidence.

7. Expanded tobacco is tobacco that has air added to it in a manner similar to
creating puffed oats cereal, thus increasing its bulk without increasing the amount of tobacco
material. Reconstituted tobacco is made by making a pulp of pieces of tobacco and putting the
pulp through a process that is similar to making paper. The result is a sheet of reconstituted
tobacco, which is then cut into the appropriate size to put into a cigarette.

11. See, e.g., State v. Clegg, 332 Or 432, 442, 31 P3d 408 (2001) ("Generally, once
evidence has been admitted without restriction, it can be used by the jury for any purpose.")
(Emphasis in original).

12. See Severy v. Myrmo, 186 Or 611, 614-15, 207 P2d 151 (1949)(holding that,
unlike some jurisdictions where the court is required to instruct the jury fully upon the law of the
case, regardless of whether any party has requested instructions, Oregon requires that a party
affirmatively request a jury instruction before the failure to give an instruction can be assigned as
error on appeal); see also ORCP 59 A (proposed instructions of law developed by the evidence
may be submitted at any time by the parties before the court instructs the jury).

14. In fact, had it been plaintiff who requested an instruction regarding in-state
activity that caused harm to nonresidents, he would not have been entitled to such an instruction
because there is no evidence in the record to support it. Because plaintiff would not have been
entitled to such an instruction, defendant was not required to request such an instruction either.

16. Defendant points out that, in its argument supporting the motion, it attacked the
specifications individually. That, however, is irrelevant. Defendant's motion did not require the
court to rule separately on each specification.

17. We note that "[e]rror, in general, must be determined by the law existing at the
time the appeal is decided, and not as of the time of trial." State v. Jury, 185 Or App 132, 136,
57 P3d 970 (2002), rev den, 335 Or 504 (2003). For example, in Woodbury v. CH2M Hill, Inc.,
189 Or App 375, 380, 76 P3d 131 (2003), rev den, 336 Or 615 (2004), we rejected a Whinston-based assignment of error even though Shoup was not issued until after the briefing in the case.

18. A century before its decision in Brown & Williamson,the Court expressly held
that a state has the authority to ban the sale of cigarettes in the same way that it can ban the sale
of liquor. It reached that conclusion despite recognizing the important economic role of those
products and the revenues that the federal government derived from their sale. Austin v.
Tennessee, 179 US 343, 345-50, 362, 21 S Ct 32, 45 L Ed 224 (1900). Nothing in Brown &
Williamson called that holding into question.

19. The statute most on point may be 15 USC section 1331, which expresses
Congress's intent to establish "a comprehensive Federal program to deal with cigarette labeling
and advertising with respect to any relationship between smoking and health," in order that
"commerce and the national economy may be (A) protected to the maximum extent consistent
with this declared policy and (B) not impeded by diverse, nonuniform, and confusing cigarette
labeling and advertising regulations with respect to any relationship between smoking and
health." 15 USC section 1334(b), which prohibits states from requiring warnings of their own, is
part of the same act and is an expression of that purpose. However, both the statutory purpose
and the express congressional preemption are limited to issues of labeling and advertising.
Under the analysis in Cipollone, liability predicated on negligence for selling a harmful product
is not preempted. See alsoBates v. Dow Agrosciences LLC, 544 US 431, ___, 125 S Ct 1788,
1801, 161 L Ed 2d 687 (2005) (in areas of traditional state regulation, congressional preemption
must be clear and manifest).

20. We note that defendant does not suggest that Congress has preempted, for
example, ORS 163.575(1)(d), under which selling tobacco in any form to persons younger than
18 is the crime of contributing to the delinquency of a minor.

21. Defendant points out that plaintiff's expert testified that defendant did not add
nicotine to the cigarette. That, however is not the point; adding ammonia and altering the pH
changed the effect of the existing nicotine on the human body.

23. On appeal, defendant assigns error both to the giving of plaintiff's instruction and
to the refusal to give defendant's requested instruction limiting the jury's consideration of the out-of-state conduct and presents a consolidated argument in support of those assignments of error.

25. The majority focuses on only one of the three theories on which plaintiff
recovered punitive damages against defendant in this case, the fraud theory. Consequently, it
does not recognize that, under the negligence and strict liability theories under which plaintiff
recovered punitive damages, the sale of Merit cigarettes to a person in Oregon would constitute
tortious conduct against which Oregon could act.

26. Judge Linder concludes in her concurrence that it does not matter whether the
instruction that defendant proposed was a correct instruction. She relies on State v. George, 337
Or 329, 97 P3d 659 (2004), as support for her conclusion. In George, the court held that the
defendant's failure to submit a correct instruction on the effect of a verdict of guilty except for
insanity did not foreclose his ability to obtain a new trial as a result of the trial court's failure to
give such an instruction. The court based its decision on two independent principles. First, it
held that ORS 161.313 specifically directs trial courts to give such an instruction to the jury,
"without regard to whether the defendant wants or requests such an instruction." Id. at 339.
Second, the trial court had made clear that it would not give such an instruction no matter how it
was phrased, so it did not matter whether the instruction that the defendant offered was correctly
phrased.

Neither principle applies to this case. It misreads Campbell to claim, as
Judge Linder does, that Campbell stands for the proposition that a trial court has an independent
obligation under the Due Process Clause to instruct a jury on the limits imposed on the award of
punitive damages without regard to whether the defendant wants or requests such an instruction.
Moreover, even if Campbell were understood to impose such an obligation, the obligation that it
identifies is an obligation to instruct a jury "that it may not use evidence of out-of-state conduct
to punish a defendant for action that was lawful in the jurisdiction where it occurred." 538 US at
422 (emphasis added). Of course, that is not an instruction that would have helped defendant in
a case such as this, nor one that would have prevented plaintiff from making the very argument
to the jury about which defendant complains.

As for the second principle, the trial court did not refuse in this case to
give an instruction on out-of-state impact no matter what form the instruction took. In the
colloquy over the instruction, defendant's counsel told the court that defendant's proposed
instruction was based on Gore and was an instruction that the trial court had given in the
Williams tobacco case. That led to the following colloquy between the court and plaintiff's
counsel:

"THE COURT: Counsel, do you have any strong
objection to that?

"MR. LANE: For the same–

"THE COURT: Strong objection.

"MR. LANE: For the same ones I have already
articulated as far as my instruction of Gore, what was said
there, that the misconduct, the unlawful misconduct in 50
states is subject to punitive damages in this courtroom. Gore
doesn't say it's not. Gore was limited to what was lawful
conduct in some states under the conduct alleged in Gore.

"THE COURT: But you are saying that unlawful
conduct can be punished throughout all 50 states?

"MR. LANE: The subsequent cases to Gore make that
an [sic] abundantly clear. The Continental cases cited by
defendants here actually referring to Gore makes the point,
citing Gore a State may not sanction a tortfeasor with the
intent of changing the tortfeasor's lawful conduct in other
states. Of course, unlike [Gore], defendant's conduct in the
case before us--referring to the Continental case--would be
tortious in any state.

"THE COURT: All right. [Defendant's proposed
instruction] is out."

As the colloquy indicates, the court had to be persuaded by plaintiff not to give
defendant's proposed instruction, and the court's decision was influenced by the language
of the instruction. Those facts readily distinguish this case from George.

27. In its motion to reduce or eliminate the punitive damage award, defendant also
argued that the award should be reduced under former ORS 18.537(3), renumberedas ORS
31.730(3) (2003), because of defendant's substantial remedial measures. Defendant assigned
error in its fifteenth assignment of error to the trial court's rejection of that argument. I would
reject that assignment as well for the reasons stated in our decisions in Williams v. Philip Morris,
Inc., 182 Or App 44, 72-74, 48 P3d 824 (Williams I), adh'd to on recons, 183 Or App 192, 51
P3d 670 (2002) (Williams II), rev den, 335 Or 142, vac'd and rem'd, 540 US 801, 124 S Ct 56,
157 L Ed 2d 12 (2003), on rem'd, 193 Or App 527, 92 P3d 126 (2004) (Williams III), aff'd, 340
Or 35, 127 P3d 1165 (2006) (Williams IV), and Williams II, 183 Or App at 184-87. What
defendant did not argue (and, hence, I do not address) is that the punitive damages award is
somehow flawed under the statutory standards in ORS 30.925(2).

28. It is worth noting that, if the ratio were calculated using a denominator of $37.5
million, based on the Florida compensatory damages award, then the ratio would be reduced to 4
to 1 and there would be no question about whether the award was grossly excessive.

30. To place this excerpt from the punitive damages instruction in context, I set forth
the full punitive damages instruction given by the trial court as follows:

"If [plaintiff] prevails, on any of her three claims, then you must
consider whether to award punitive damages. To recover punitive damages,
[plaintiff] must show, by clear and convincing evidence, that Philip Morris has
shown a reckless and outrageous indifference to a highly unreasonable risk of
harm and has acted with the conscious indifference to the health, safety, and
welfare of others. Clear and convincing evidence is evidence that makes you
believe that the truth of the claim is highly probable. If you decide that the
defendant has acted as claimed by the plaintiff, you have the discretion to award
punitive damages. [The quoted portion in the text above is omitted here.] The
amount of punitive damages you may award may not exceed $300 million dollars.
You may not allow your decision regarding punitive damages to be affected by
the fact that Philip Morris's principal offices are outside of this state or by its
corporate status."

31. By way of contrast, the following instruction was given to a jury by a federal district
court in Nevada:

"While the amount of punitive damages to be awarded lies within your discretion,
the amount awarded must not exceed the amount that you find the plaintiffs have
proved, by a preponderance of the evidence, is reasonably required to vindicate
Nevada's legitimate interest in punishment and deterrence, if any. In determining
the amount of punitive damages, if any, reasonably required to vindicate Nevada's
legitimate interest in punishment and deterrence, you may not add damages to
protect people or to punish harm to people outside of Nevada. However, you may
consider defendant's out-of-state conduct in determining the reprehensibility,
deliberateness, or culpability of the defendant in the acts for which it has been
found liable in this case, provided that the out-of-state conduct is both connected
to and similar to the specific harm suffered by the plaintiffs."